Separating, what does it mean for your mortgage?

You're separating, and alongside all the emotional and practical matters, the mortgage needs to be sorted out too. Whether you were married, in a registered partnership, or living together unmarried: who stays in the home, who moves out, and how do you make sure you're not left liable for a mortgage you're no longer part of?

This guide gives you a broad overview of what's involved in a release from joint and several liability: what it means, what the bank asks for, and which steps you'll need to take. For the translation to your personal situation, with all the details that come with it, we're here for you.

Three things you need to know

Separating with a joint mortgage brings up a number of topics that may be new to you. Here's a short introduction.

Joint and several liability

With a joint mortgage, you're each liable for the full amount, not just half each. This stays the case even after you've separated, until the bank formally releases you from it.

Settling the equity

When deciding who takes over the home, the equity (or any remaining debt) needs to be fairly divided between you and recorded on paper.

A new mortgage assessment

Whoever stays in the home needs to be reassessed on their own income, to see if they can carry the mortgage alone. This isn't a given and takes good preparation.

If you were married or in a registered partnership, this runs through the settlement agreement and divorce deed. If you lived together unmarried, the notary draws up a deed of division for this. We guide this process in both situations.

What determines whether it works, what does it cost

A release from joint and several liability doesn't happen automatically. Here's the answer in broad strokes; the exact situation depends on your circumstances.

What determines whether it's possible

• The income of whoever stays in the home must be enough to carry the full mortgage
• The value of the home relative to the mortgage debt
• Approval from the lender: not every bank cooperates with this automatically
• The terms of the NHG (National Mortgage Guarantee), if applicable

An agreement on paper is not the same as a release. Towards the bank you remain jointly and severally liable for the full mortgage, until the lender formally releases you from it.

Does your settlement agreement, divorce deed or deed of division state that your ex-partner will cover the mortgage payments? Even then, you're only truly free after the formal release by the lender. This applies equally to married couples and registered partners as to unmarried cohabitants.

Costs of a liability release

• Valuation fees for the current market value
• Notary fees for the deed of division
• Advisory fees
• Any early repayment penalty, if the mortgage is amended

Good to know

Transferring your share of the home to your ex-partner is often exempt from transfer tax. This applies whether you were married or living together unmarried. We'll check together whether this applies to you.

The process in a nutshell

1. Valuation of the home. A current valuation shows what the home is worth and whether there's equity or a remaining debt.
2. Financial overview and feasibility. We assess whether whoever stays in the home can carry the mortgage alone, based on their own income.
3. Recording the settlement. If you were married or in a registered partnership, the division is recorded in the settlement agreement or divorce deed. If you lived together unmarried, the notary first draws up a draft deed of division, which is later signed in its final form.
4. Application with the lender. We submit the application for release from joint and several liability and guide the contact with the bank.
5. At the notary. The deed of division and, if needed, a new mortgage deed are signed, after which the liability is formally transferred.

What we do for you

• We prefer to be involved early in the process, and have short lines with the mediator
• Advise and arrange the mortgage side of things
• Map out the financial overview and feasibility
• Stay in contact with the lender about the release from liability
• Work together with your mediator and notary where needed
• Short lines of contact: reachable via WhatsApp, phone and email
• Personal contact, at our office, at your home or online

Common mistakes when separating

1. Thinking the agreements on paper are enough. Only the bank can formally release you from liability.
2. Testing feasibility too late. Check early on whether the person staying can carry the mortgage alone.
3. Not settling the equity correctly. This can lead to conflicts or unnecessary tax disadvantages.
4. Forgetting to review your insurance. Think of the term life insurance and the home insurance in your name.

Ready to talk further?

Every situation is different, and the details often make the difference. Schedule a no-obligation introductory meeting, or ask your question in advance via WhatsApp, phone or email.