Mortgage after divorce
Today, more than 50% of apartment purchases are carried out using mortgages, where families are often the parties to the transaction. However, according to judicial practice, the figures are not encouraging in terms of the number of divorces.
A mortgage real estate acquired during the marriage is considered jointly acqdiuired and property, and therefore, upon divorce, it is divided in half (or into unequal parts if the spouses have children during the marriage). Of course, a broken up couple rarely continues to live together, so often such an apartment is sold, exchanged, or the other half is bought out from the spouse.
There is another solution to this, removing spouse from mortgage by re-registration of a mortgage on one of the spouses – the first in this case receives the entire apartment and obligations to repay the loan, and the second – reimbursement of the funds spent by him to pay off the debt before the divorce. After re-registration and payment of compensation, the second spouse loses the right to claim a share of the apartment. Often, the second spouse has another home – for example, inherited or provided by the employer – and for him there is no point in paying off unnecessary loans.
Can the bank refuse to reissue?
Most often, mortgage re-registration is a purely formal procedure for a bank. The joint liability of the spouses is replaced by the individual liability, and the loan repayment continues. However, banking professionals make decisions on a case-by-case basis – and may reject a renewal application.
Of course, the bank will be more favorable if the mortgage re-registration is planned for the title borrower, who has already shown himself as a disciplined payer. In this case, it is enough just to deduce one co-borrower from the total number. If the loan is re-registered to another spouse, the bank will most likely require a new credit check. And if the submitted documents show that the client is insolvent and does not meet the established requirements for the borrower, the renewal will most likely be refused.
Another classic case of refusal is the lack of credit discipline among borrowers. If annuity payments were made irregularly, with significant delays, and caused concern to the creditor, the bank can refuse to share credit responsibility – it receives much more guarantees when it has the right to demand payment from two debtors.
For insurance, most banks prescribe a clause in the loan agreement stating that after the dissolution of the marriage, the obligations of the spouses to the creditor do not change – which means that if one of them refuses to repay the debt, this obligation goes to the second.
If both debtors refuse to pay, the bank has the right to sell the pledged property – after withholding all the expenses of the creditor, the unscrupulous borrowers will be left with a penny.
To tip the scales in your favor and convince the credit institution of its reliability, you can attract new co-borrowers who are trustworthy by the standards of the bank.
First, you need to make sure that the spouse to whom the loan is being reissued meets the requirements of the lender to the borrower, and that the bank is not opposed to going for re-registration. Only after that should you start collecting documents.
After the positive decision of the bank and the re-registration of the loan, it will also be necessary to re-register the apartment to its new owner
It is important to remember that re-issuing a loan will most likely require re-issuing insurance. In addition, many banks set a commission for changing the terms of the agreement in the amount of 0.5-1% of the debt.
To reissue a mortgage for a spouse, the bank must submit:
- petitions of the former spouses to re-register the loan for one of them;
- documents confirming the identity and solvency of the borrower (copies of the identity document, work record book, income statement, etc.);
- divorce certificate;
- documents related to children and alimony payments.