Planning for the family home in a divorce with children

Deciding what happens to the family home following a divorce is one of the most challenging parts of negotiating the financial settlement. You may want to preserve your children’s familiar routines while ensuring that both you and your ex-spouse have suitable accommodation. In this article, I set out the options for dividing the family home in a divorce if you have children.

If you would like advice on your own situation, our family home and divorce solicitors can help. Book a free 30 minute consultation.

What Information do I need to gather regarding the family home?

Start by getting an up-to-date market valuation and a current mortgage redemption figure. Check whether there are any early repayment charges and estimate the likely costs of selling. Once you subtract those amounts, you’ll have an estimate of the net equity. This figure can help you explore your options, although it won’t determine how you divide the equity.

Next, look at what each household can comfortably afford. Set out each household’s income and regular commitments, then add likely housing costs and borrowing capacity. If one of you hopes to keep the home, it is important that you speak with a mortgage adviser about whether you can transfer the mortgage into one party’s name or replace the mortgage. Your lender will need to agree before the other borrower can be released from the mortgage.

The home is part of the wider financial settlement, so it’s also important to gather current details about your other assets and liabilities. Pensions and savings may affect whether one person can keep the property, while debts and future income may also change how much each of you can borrow.

Your children’s arrangements should also be reflected in the housing budgets. Think about where they’ll stay and how each home can support family life. School journeys and any additional needs may affect the location or space you’ll need. It’s also important to work out the ongoing costs of the existing home, including the mortgage, council tax, insurance and repairs.

What are the options for dividing the family home in a divorce?

The court must consider all the factors under section 25 of the Matrimonial Causes Act 1973. First consideration is given to the welfare of any child of the family under 18. The court also considers each person’s resources and needs. The family’s standard of living and each person’s contributions also form part of the assessment. Every family is different; therefore, it is crucial to involve an experienced Divorce Law Solicitor as soon as possible so the particular needs of you and your children are assessed and factored into the final divorce financial settlement. Whatever you decide about the house becomes part of your overall settlement. Our guide to divorce financial settlements explains how assets are divided.

Below are the main options for dividing the family home in a divorce with children:

Selling the home

A sale may be a good option if neither of you can afford the property alone, or if you both need capital to secure new accommodation. Start by estimating the likely net proceeds and checking whether they could support two realistic housing plans.

You’ll need to agree on how the property will be valued and marketed. It also helps to set out practical arrangements for the mortgage and council tax, and decide who will be responsible for insurance and any necessary repairs until completion. The proceeds will form part of your overall financial settlement, and how they are divided will depend on your circumstances.  The division of the net equity is not necessarily an equal one.

Transferring the home

A transfer means that one person keeps the home.  This could be on the basis that the other receives a payment or equivalent value elsewhere in the settlement, or an outright transfer without payment.  It depends on the overall financial settlement to achieve a fair outcome for both parties taking into account the section 25 factors. To calculate the available equity, start with an agreed property value and mortgage balance. The person keeping the home will generally need to meet the lender’s affordability checks so that the other can be released from their mortgage liability.

Transferring ownership does not automatically release the outgoing person from the mortgage but is often a condition for an agreement to transfer the property. The lender must agree to remove them as a borrower, which may mean arranging a remortgage. The transfer and any balancing payment should be agreed together as part of the overall financial settlement.

Deferring the sale

A deferred sale enables one spouse and the children to stay in the home until a specified date or event when the house is then sold (a trigger for a sale would usually be the earlier of the occupying spouse remarrying, dying, when the youngest child turns 18 or leaves full-time education or another pre-agreed date).

The terms of the deferral should clearly identify what triggers the sale and who will cover property costs and mortgage payments. They should also explain how repairs will be approved and how the proceeds will eventually be divided.

Remaining joint owners

Temporary joint ownership can give you some time to plan a later sale or transfer. To make the arrangement work smoothly, set a clear end date and agree on how you will handle the property’s costs. It’s also worth considering how ongoing mortgage liability could affect each person’s ability to borrow for another home.

Under the mortgage terms, each borrower remains responsible for the full joint mortgage so it is important to establish how the mortgage will be paid and the consequences for non-payment . A missed payment will affect both parties’ credit records and make future borrowing more difficult. To help avoid confusion, your agreement should clearly state who will make each payment and what will happen if the sale or remortgage can’t go ahead.

Shared care and housing budgets

When children spend substantial time with each parent, both homes may need to offer suitable space and be close enough to school. Supporting two homes can put greater pressure on the family’s income and capital, so it may help to prepare a separate budget for each household.

Consider whether keeping the existing home would leave enough money for the other parent to find suitable accommodation. The court considers the children’s welfare as the first consideration in the overall financial picture. A shared-care arrangement does not automatically entitle either parent to keep the family home or to a larger share of the sale proceeds.  Each case is dependent on it’s own factors and early legal advice is essential before any agreement is reached.

For a fuller explanation of how the court decides, see our guide to who gets the family home in a divorce with children.