How to keep the family home after separation

If you’re going through a separation, you’re probably considering your options when it comes to dividing your money and property interests. If you are considering keeping the family home you may be wondering, ‘what exactly do I need to do to achieve this?’

To retain the jointly owned family home after separation, you will first need to reach an agreement with your ex-partner. Your agreement will cover how all your assets and debts (including motor vehicles, bank accounts, investments, and superannuation entitlements) will be divided between you.

You should speak to a mortgage broker or lending banker as soon as possible to ascertain your borrowing capacity. You will need to borrow sufficient funds to pay out any mortgage secured on the home as well as any additional cash sum to your ex-partner.

You may benefit from speaking to a financial advisor at any early stage to discuss your financial goals and implications of taking on debt to secure the home. Once your banker or broker has confirmed the amount you can borrow, and ideally the lender has conditionally approved your loan, your lawyer can prepare the relevant settlement documents for signing by you and your ex-partner.

You can formalise your agreement by way of Consent Orders filed with the Federal Circuit and Family Court or a Binding Financial Agreement (‘BFA’). Formalising your agreement this way means you won’t have to pay stamp duty on the property transfer.

Provide a copy of your sealed Consent Orders or BFA to your lender so they can proceed with your new mortgage loan application. Your chosen settlement document will include a timeframe for your ex-partner to transfer their interest in the home to you.

The transfer will typically happen at the same time you pay any cash sum to your ex-partner and pay out monies to discharge the current mortgage. The transfer will take place via e-conveyancing platform ‘PEXA’, with the help of your lawyers.

Once the transfer is complete, you will be the sole owner of your home!

Other things to consider including in your settlement document:

1. Who will pay the mortgage repayments up until the transfer?
2. Who will pay rates, insurances, utilities, and other outgoings related to the home up until the transfer?
3. What happens if your finance falls through and you are unable to pay out the mortgage and/or pay a cash sum to your ex-partner after final orders have been made? Your settlement document will typically include a backup ‘default sale clause’ that provides for the home to be sold, the mortgage discharged, and the net sale proceeds to be divided between you and your ex-partner.

If you are looking to retain the family home and require advice, you can contact one of our experienced family lawyers for assistance.