In most divorces the matrimonial home is the largest asset a couple has. Figuring out what you’re going to do with it can therefore be a difficult process, especially because there is usually an emotional attachment to a home as well. Matrimonial means that this is the primary residence of the couple on the date of separation. Even if the home was purchased before the marriage and/or purchased by only one spouse, both have equal rights to the matrimonial home. The Matrimonial Property Act S. 19(1) states that ownership has no bearing on possession and both spouses have an equal right to possession of the matrimonial home. This means that whatever you decide to do with the house will be a decision you make together as each of you is owed 50% of the value of the home. Whenever possible it is best to try and figure it out between the two of you, involving lawyers and going to court can take both a financial and emotional toll. If you don’t know where to start you can head to thistoo.co and try the asset calculator to see what an even division of assets could look like.
To help you figure out what to do we’ve broken down all of the options you have for your home after divorce.
1. Sell the House and Divide the Proceeds
This option usually makes the most financial sense. You will no longer be able to rely on two incomes so keeping the house is often too expensive for one person to manage. Selling the home can give you the freedom to start fresh on your own and find a new place that you can afford on your own. Though it may be difficult to do, you and your spouse should both be present throughout the selling process and both be fully aware of the selling costs and what your net proceeds will actually be. This will ensure that the process goes as smoothly as possible and that there are no surprises at the end
2. Buy Out Your Spouse
There are many valid reasons to keep your home but you need to ensure that you are in the financial position to do so. If you want to buy out your spouse you will have to pay them half of value of the home. If you have a mortgage on the home that you have both cosigned, you will need to refinance your home so that your spouse is no longer liable for the mortgage. Even if you guarantee to pay the mortgage yourself the fact that the mortgage is in their name could make it impossible for them to get financing for a new home. It also may be difficult for you to get refinancing on a single income. Before deciding whether or not to keep your home meet with a financial advisor and your bank to figure out if you will be able to afford it. During this process don’t lose sight of other financial goals you have; it you're planning on retiring in ten years or paying for your children’s education, for example. You need to keep these expenses in mind when looking at what you can afford. If you would like advice and a recommendation for a financial planner contact Thistoo:
3. Have Your Spouse Buy You Out
If your spouse wants to keep the home you need to consider all of the same things mentioned in option 2. You want to make sure that your spouse will not only buy you out but will also be able to refinance so that you are no longer liable for the mortgage. When determining the value of the home use a real estate agent that you and your spouse both approve of and be present during the valuation process. Don’t be afraid to get a second opinion so that you can ensure you’re being paid what you’re owed.
4. Retain Joint Ownership
Some couples decide not to sell the home right away and will retain joint ownership. They may co-exist in different areas of the home or property, one spouse could move out while continuing to make mortgage payments, or both spouses could move out and they could rent out the home. There are many different reasons and scenarios in which the couple will decide to not split up their assets right away. In doing so though, understand that you will still be tied to your Ex financially for a certain period of time. It can be a good idea to outline in your divorce or separation agreement how long you plan to retain joint ownership so that you have a clearly defined plan for your joint ownership. If you have not yet created your separation agreement you can do so at thistoo.co.
Deciding what to do with you home can be a complicated process. You have to look at all your options and weigh the benefits of each. We hope this guide helps to simplify the process. At Thistoo our goal is to make the divorce process as easy as possible. Head to thistoo.co to see how we can help you.