Mortgages are one of the most common ways to purchase real estate. Often, houses purchased with the use of credit funds become the subject of partition in a divorce of spouses. There are no special difficulties in such a division, but you should consider several nuances. It more depends on whether the marriage was registered, in whose name was the mortgage, as well as whose funds were contributed to the repayment of the loan.
Real estate purchased on the mortgage during a marriage is subject to joint ownership. Spouses are usually co-borrowers but registering a mortgage loan or the deed in the name of one of them does not change anything – it does not deprive the other spouse of rights to it. Banks now often have a clause in the contract which states that the dissolution of the marriage by the co-borrowers does not change anything in the terms of the agreement between them and the bank. They are also required to notify the bank of the divorce as it relates to circumstances that change their financial situation.
Spouses do not have to change anything about the house when they get divorced – they can agree to continue making joint payments and later sell the property. During the term of the mortgage, it is also possible to divide the house and determine the shares of each spouse, in which case they become independent borrowers. However, the bank may refuse to do so if one spouse’s financial standing worsens and he or she cannot make the payments. The bank may require early repayment of the loan to minimize its risks.
