Tamsin Caine speaks to Carole Nettleton from Price Slater Gawne about the family home. What are the options, why you might choose one over another, what the courts might say and why it is vital to take professional mortgage advice.
(The transcript has been created by an AI, apologies for any mistakes)
Tamsin Caine 0:06
hello and welcome to the Smart Divorce podcast during series three we will be answering some of the questions we most commonly get asked as professionals working with divorcing separating and clients dissolving a civil partnership if you have any more questions we’d be delighted to answer them please visit our website www dot smart divorce.co.uk and i’ll hand over to today’s guests
hi i am delighted to be joined today by Carol Nettleton from Price Slater Gawne, hi Carol how you doing?
Carole Nettleton 0:48
Hi Tamsin i’m doing very well thank you how are you doing on this rainy day
Tamsin Caine 0:52
all right sun looks like it might actually be coming out which would be which would be good and so we’re going to talk today about the family home and the options available for dealing with family home it’s a topic i get asked about all the time so we’re going to cover all the various options today but before we get cracking do you want to just introduce yourself
Unknown Speaker 1:18
i’m a family law consultant at Price Slater Gawne in option i deal with divorce separation dissolution and civil partnership helping people to deal with their finances and arrange children when their relationship is breaking down i mainly deal with helping people sort out their finances i qualified in 1996 i’ve been doing this for a little while now so yeah that’s a bit about me
Tamsin Caine 1:47
fantastic thank you so we’ll move straight on so the family home is obviously a really emotive subject when when we’re looking at divorce and it’s one of the big things as i said before that we often get asked about so what are the options available when we’re looking at dealing with family home
Carole Nettleton 2:07
sam’s Tamsin there’s a range of options that the divorce court can look at when dealing with the family home because often family home is an important asset both in terms of finances not emotionally so the family court they can order transfer the family home to one party and not paying a lump sum to the other outright transfer they can order a transfer to one party and the other party receiving a lump sum they can order sell the property the division of the equity on a sale or they can order transfer into one party’s name and then the other party gets the lump sum at some triggering event in the future usually when the children are at orphanages full time education or often it’s the wife who wants to stay in the family home so the divorce courts have very very flexible and may have this overriding priority to make sure children have a home so in every case and every case is that specific look at giving that the how do we achieve a home for children but also home for both parties both husband and wife and so that’s the range of options available they’ve got a wide wide range they can look at then they’ll look at all cases fat specific and then apply well okay what should we do with the family home what’s best for children how can we achieve a fair and reasonable result parties that’s what they want from it
Tamsin Caine 3:39
fantastic and we’re going to talk about husband and wife and and the way we talk about it is sometimes the other way around so we’re talking about it one way but it doesn’t necessarily have to be that way it could be the other way around and we are also talking about husband and wife but it could be husband and husband or wife and my partners as well just to make that clear the rules are the same for when i say several partners i mean a proper civil formal civil partnership not just people who’ve been living together because that’s slightly different
Carole Nettleton 4:15
that’s a different topic for another podcast yes so if we talk about husband and wife i think that just makes it easier for people to understand it applies to husband a husband wife and wife or civil partnership because the rules are the same it’s about economics but economics and affordability and income as well so all those are covered yeah
Tamsin Caine 4:39
okay so let’s start off with option one were you one part is transferred the property but there’s no chain no exchanging of money of a lump sum so what circumstances does that add that relevant
Carole Nettleton 4:57
so that might be in a situation where there Limited equity in the property equity. When someone comes to me to deal with this, we get a valuation of the property. They ask them what’s outstanding on the mortgage because we need to assess what equity there is in the property, what property would achieve if it was sold on the open market, that’s called equity. So often, an outright transfer will be where there’s no equity in the property, but wife can afford to take care of the mortgage if she wants to stay there. Or sometimes an outright transfer was no lump sum, perhaps as assets elsewhere. But it depends, again, I’m going to be saying it depends. That’s my phrase that we do talk about. That does depend. And it’s specific, because what the court wants to do if one party wants to stay in the property, then look at Okay, what do we give the other party? What’s a good result? What’s the results for the other party, it’s not making one party more dominant, it’s a fair and reasonable outcome. So transfer with no lump sum is quite unusual, because often there will be a fund of equity in a family home because people may have lived there for a long time that paid off the mortgage. No, they want to look into the future together. So the next option where it’s a transfer with a lump sum, is often I find a lot water will happen because we’re looking at a home for both parties. And how do we achieve that?
Tamsin Caine 6:28
Yeah. So if we’re looking at a transfer with a lump sum, it’s not necessarily having to re mortgage and take extra money from the property if there are funds elsewhere.
Carole Nettleton 6:39
Now, so it’s always about affordability. So when a party comes to me, I say, Well, okay, tell me what the property is worth. Tell me what the mortgage is coming up the mortgage is a month, what income Do you both have, we then look at maintenance, because it is definitely about affordability, to know if there is an equity in the property, and one party wants to stay there and can afford to do so? Yes, we’ll look at other assets to say what Okay, is it then fair and reasonable that the other party keeps other assets under the one party keeps the home? So often it can be offsetting different assets to deal with the family home in that proactive and fair way? So yeah, that definitely will. We have the lawyers have this horrible word called matrimonial pots. And the idea is we get all these assets, individual and boy, and we put them into some imaginary parts, and the division is fair and reasonable. And yes, so it’s their savings or their policies that their shares. What exactly is there? And what could we do with a family home? Who wants to stay there? Do they want to stay there? Can they afford to stay there? All those questions come into the equation. So it’s very fact specific. But if I’m acting for a husband, or party doesn’t want to say that, then I’m wanting a lump sum for them. And I’m wanting a release from the mortgage? Because each party needs to move on, practically and emotionally.
Tamsin Caine 7:59
So yeah, absolutely. Okay. And the third option is, in order to sell the property, under what circumstances is is this usually come into play,
Carole Nettleton 8:12
this usually comes into play when it’s unaffordable to remain at the property or the property is too big for persons need. So often, I might get a wife who’s lived in a six bedroom property separating that is no longer needed. So there’s an expectation that they free up any equity, that they downsize, possibly to a mortgage free property. Because it’s about making sure everybody has their home, and particularly if their children that both parties have a home to which the children can go between and they have accommodation for both. So it’s sale is often the most emotive and can be the most difficult option, particularly if one party has not sought separation, and feels that they’ve been pushed up their home.
Tamsin Caine 9:07
There are there’s a positive spin we can put on this, though, isn’t there in I’ve certainly dealt with clients and have friends who’ve moved on from the family home, because it’s a rip, sometimes a real struggle to stay in the home, pay all the bills, etc, and have moved into a new home and actually found that a really positive experience because they can start that new chapter in a place that’s only ever been theirs and they’re not surrounded by memories of a previous relationship. Is that your experience as well?
Carole Nettleton 9:40
Yeah, absolutely. And I can speak from personal experience. I went through a very acrimonious divorce about 10 years ago. So we had a nice big house that we sold and I downsized by mortgage free with my two children. And so me, yes, it was hard in one sense Leaving, but not really, because it’s meant that the future has been this, this home has been my own home, but I’ve only shared it with my children. So the only positive memories attached to it. And it has been emotionally for me and for lots of my clients is a positive thing. But some it’s a hard hurdle to get over. But I agree with you definitely, that sometimes the emotion attached is caught up in the emotion of the moment. And that actually when you take that step, maybe you’re forced to sell or it’s not affordable that life is okay. And you have this home that is is your own, and it has no no badmouth difficult memories attached. And when you shut the door, you know, it’s yours. No come in unless you let them. And then me personally, that that’s been a very positive thing. So I understand completely the emotion that people attach to their family homes. But equally I agree with you that it’s a very positive, emotional step to if you if you have a son, I don’t think you look at as negativity negatively as it can be.
Tamsin Caine 11:10
Yeah, I think it’s the it’s the initial fare, isn’t it? It’s the first thing the new separates, are aware of, we’re gonna live in the thought of living somewhere different and moving house on your own is quite terrifying. But I think actually, the reality is Yeah, areas there.
Carole Nettleton 11:26
Is the thought in your head. No, absolutely. I can remember open up three o’clock in the morning again. I mean, the children gonna live, where are we going to live? Palak that you have thinking, Oh, this future is so uncertain. I don’t know what’s going to happen and remade in my old home. Would it be easier but harder? Because it’s about affordability. And it was about the emotions that the unhappy emotions that were attached to, to that place? And moving on, that means that I don’t have them. And But yeah, I think because it is so uncertain for some people. Everybody is going through a divorce that, yeah, we Yeah, but the courts are there to help. And that for my experience, the court will do, will try and meet what people want, if that’s possible, because they’re working in each individual situation. So courts have very good I found in making practical and economic outcomes in respect to the family home. Fantastic. And we have one final thing to discuss, which is the option of staying in the family home until the children are aged 18 or leave full time education. So
Tamsin Caine 12:41
how does that work?
Carole Nettleton 12:44
That’s called a measure order. And that works where there is a fund of equity that may need to be released at some point in the future. Again, overriding needs for home for the children. So to achieve that one party, often the wife stays there. And then when the children are 18, or the full time education or the wife, remarries, or cohabits, the property has been sold. And her husband will get a lump sum percentage based at that point in the future. But I’m acting for husband, that’s not ideal, because you may be tied to a mortgage, you can’t get your own mortgage. So we will explore can husband be released from the existing mortgage. But also it means that you have to wait for your lump sum, where you may have an you may need it or want it now to put down a deposit. But that’s a halfway house between a sale and making sure the children have a home. So yeah, I think I’ve found that the courts have very, very sensitive and sensible about the family home because they understand that it can often be the main source of capital in a region, and also the emotions that are attached to it both for wife and children. And these types of orders where it’s delayed sale is delayed, can be helpful, because time then moves on. And it’s not such a difficult step to take sell the home if you’ve not wanted to do that the children have barn, that that’s been part of it. So yeah, I’ve generally found that the courts are very sensitive. And we’ll look at what a party wants, what they need, what the children need, and make those orders accordingly.
Tamsin Caine 14:30
Yeah, I think you’re absolutely right. And the one thing that’s really important is to get really good mortgage advice. And make sure that you don’t just go into your own lender and and taking whatever they’ve said as being the Kip situation, wherever because lots of lenders have different different options available. And yeah, absolutely tapped into that.
Carole Nettleton 14:54
I would always say to my clients, that you need to get proper advice from a financial advisor because your existing lender may not look at maintenance as an income that they will accept they may just look at your salary and if your salary is not enough but your income is enough your income in the round is enough we’re looking at maintenance child benefits that another lender may be more open to that than your existing lenders to explore all options if you want to stay then you must explore all options with a financial advisor because they will know and guide you to ensure that okay if you want to sell you can if you have to remortgage that you can if you have to raise a lump sum that you can so it’s all about affordability and assessing whether your entire income from whatever sources in during a weekday in the family home so yeah definitely it’s it’s it’s so important to take that advice particularly because it’s the family home is often the main asset or company a big part of someone’s economic situation so it’s really important and also it can be made affordable so if you can restructure your mortgage your knowing that actually a can’t afford it can’t afford it existing long because it’s too much but i might have to restructure it in terms of how long i take it out or what to do with it or within the lender so it’s so important yeah
Tamsin Caine 16:25
yeah they’re out there are loads of options available so we would always get people to take professional mortgage advice we don’t actually do them ourselves but we’re going to be talking to daniel bell from bell yeah
Carole Nettleton 16:39
Tamsin Caine 16:40
and he’s going to give us more information in a couple of weeks time on on how to go about sorting your mortgages out so that should be great carol thank you so much for joining me today
Carole Nettleton 16:53
it’s been such a pleasure thank you for inviting me counsel it’s been such a pleasure
Tamsin Caine 17:01
thank you for listening to the smart divorce podcast if you’d like details of our guests today or of myself so you can get in touch please check out the programme notes many thanks see you again soon
Transcribed by https://otter.ai