Mortgages & Valuations on Divorce

Volatile Markets and Divorce – Where Do Separating Couples Stand with Valuations and Mortgages?

The UK’s mini-budget on 23 September 2022 caused shockwaves throughout the UK and across the world and saw the resignation of Liz Truss and the pound hitting a 37-year low.  The markets have somewhat regained since this dramatic downturn but industry experts suggest that market volatility is set to remain for the foreseeable future, but what does this mean for separated couples or those currently in divorce proceedings?

Housing Market and Mortgages

One of the main assets typically in a divorce is the family home and most people’s primary concern when they start the divorce process is in relation to their future housing arrangements.

A primary concern in the legal industry as the markets continue to be relatively unstable is that of housing needs and borrowing capacity. When we look to resolve the financial matters between the parties this involves a consideration of what type of housing they need and what they can afford. Of course, with the ongoing disruption in the economy and the ever changing Bank of England base rates, it is difficult to rely on these figures.

With house prices increasing and salaries not moving at the same rate, it is becoming difficult for many couples going through a divorce to find houses that are available on the market in their price range. There seems to be an underlying fear of a great recession and with the increased cost of mortgages, many people are pulling out of house sales and choosing to stay in their current home, meaning that divorcing couples may lose their sale or their next home.

It is therefore important to consider not only utilising online mortgage calculators to obtain your earning capacity but to also speak to a mortgage broker or independent mortgage expert to ensure you are able to get the best possible deal and that a new mortgage would be affordable.

 Valuation of Matrimonial Assets

Part of the process when getting divorced involves settling the finances and reaching a financial settlement. Throughout the process, it is important to ensure that the most up to date valuations are used for assets, as the volatility in the market could mean that changes to values impact the overall fairness of a potential settlement offer.

For cases involving international assets it is important to also consider the impact that the market has on the pound and how this will change valuations that are prepared within divorce proceedings.

Some industry experts suggest that whilst the market remains unstable it may be more beneficial for couples to consider selling and splitting assets rather than offsetting (a process whereby you agree to exchange one asset for another e.g. cash now rather than a pension share). It is more important than ever that people look to get up to date valuations for their assets to ensure that the settlement reached reflects a fair outcome.

Overall, it is very important that with the ongoing financial turmoil that the UK is currently experiencing that clients seek specialist family law advice to ensure that their asset base is divided appropriately and that matters are dealt with expeditiously. Maguire Family Law’s specialist team of expert family solicitors are able to guide clients through this tricky time and help them obtain the best possible outcome.