Property Values, Volatility, and Divorce Financial Settlements
In a week of reports of projected falls in property values, the withdrawal of some mortgage products, and news that those on fixed deal mortgages expiring before the end of 2024 will be in for a hefty mortgage rate rise, our family law solicitors look at property values and market volatility and how this may affect your divorce financial settlement.
Online and London Family Law Solicitors
For family law legal advice call the London family lawyers at OTS Solicitors on 0203 959 9123 or complete our online enquiry form.
Property values, financial disclosure, and divorce
When you are getting divorced and negotiating a divorce financial settlement you and your estranged husband or wife need to provide full financial disclosure of all your assets, including any property. That involves providing an estimate of what you think your house is worth together with a mortgage redemption statement saying what is outstanding on the mortgage. The redemption statement should also detail:
- How long is left on the mortgage term
- The date of expiry of any fixed-rate deal
- Any penalty payment if the mortgage is redeemed early
Do you need a property valuation?
You may not need to pay a surveyor for a formal property valuation. For example, if:
- You are both certain that you want to sell the property and are intending to get a few estate agent appraisals so you can put the property on the market for an agreed figure and you both agree that you will both get a percentage share of the equity in the property rather than one of you getting a fixed amount and the other spouse receiving the balance of the equity. With a fixed sum and a falling property market, the spouse receiving the balance of the equity may end up not being able to afford another property because the equity balance could be nominal after the property price falls
- An identical property/ies have sold recently and you know the sale price/s (rather than the marketing price)
The timing of a property valuation
In a volatile property market, it is crucial to get the timing of your property valuation right so it is not wildly out of date by the time of your family mediation sessions, arbitration meeting, or divorce financial settlement court hearing. You may both agree, or the court may order, an updated valuation report but that can just add to the expense.
Family law solicitors warn that you may be wasting your money if you pay for a property valuation by a surveyor without first consulting your estranged husband or wife about your choice of proposed surveyor or the remit of their instruction. That’s because if you instruct a surveyor yourself your ex-partner may be suspicious about the surveyor’s independence and may want their own expert property valuation. Normally in solicitor negotiations, family mediation, arbitration, or divorce financial settlement proceedings, the husband and wife will agree, or the court will order, that one surveyor is appointed jointly by both parties with the identity of the surveyor agreed upon by the spouses and with a joint letter of instruction being sent.
An agreed letter of instruction is important because you may want to flag up certain issues and ask how the issues may or may not affect the property valuation. For example:
- Not having building regulation approval for a loft conversion so not being able to officially list a property as having 4 bedrooms
- If the property is cladded and there are concerns about mortgage lending on it
- The property has a large garden with the potential to get planning permission to extend or to subdivide the plot for a new build in the garden
- There is an ongoing neighbour dispute over boundaries that will need to be disclosed if a purchaser is found. For example, if a neighbour alleges your property extension has encroached onto their land
Properties and mortgage inquiries
Where a property is owned subject to mortgage additional inquiries need to be made of the mortgage company. You need to know if the answers from the mortgage company can be relied on indefinitely or if the responses are only valid for a limited period. For example:
- Will the mortgage company charge a redemption penalty if the house and mortgage are changed from joint names to sole names? The answer may affect your decision to sell or transfer the property
- Will the mortgage company offer the same fixed-rate mortgage deal if the house is transferred into your name or your ex-spouse’s name? The outcome of that inquiry may affect your ability to take on the mortgage or the amount of any spousal maintenance payments needed to help you or your ex-spouse meet the mortgage payments and other household bills
- Will the mortgage company agree to transport your fixed rate mortgage deal to a new property or will they agree to not charge a redemption penalty on the sale of the family home and repayment of the mortgage provided that you or your ex-partner take out a new mortgage with them on the simultaneous purchase of new property/ies
- Will the mortgage company agree to transfer the existing joint mortgage into the sole name of your husband or wife and are there any requirements? For example, the mortgage company may say that there must be evidence of income (a spousal maintenance order as part of a financial court order or Child Maintenance Service assessment)
- Will the mortgage company agree to the extension of your mortgage term (to say 35 years) to make the monthly mortgage payments affordable for you
In addition to speaking to the mortgage company, it may also be best to speak to a mortgage broker to see if they can help with your mortgage company inquiries or help you by coming up with a better deal with a new mortgage provider. A mortgage report may be necessary for use in family mediation, arbitration, or divorce financial settlement court proceedings to evidence your mortgage capacity or to explain the requirements of the existing lender and any alternate mortgage options.
How the family lawyers at OTS Solicitors can help you
In a volatile property market with changes to property prices and mortgage availability and affordability, it is best to speak to a family law solicitor about how best to protect yourself so you are not the one left suffering the consequences of current uncertainty when separating or divorcing. Our family law solicitors can help you negotiate a family law financial settlement or represent you in divorce financial settlement court proceedings.
Online and London Family Law Solicitors
For family law legal advice call OTS Solicitors on 0203 959 9123 or complete our online enquiry form.