I got a divorce: What happens to the home loan?
Are you going through a divorce and jointly own a property with your ex-spouse through a housing credit? Find out what can be done to the credit contract, depending on whether one of the parties wants to keep the property or not.
Divorce and mortgage credit: How does it work?
In case of divorce, a joint housing credit is one of the issues to be addressed, alongside asset sharing. However, the solution to be adopted will depend on whether any of the couple members undergoing separation want to keep the property.
In the sale of the property
If neither member wants to keep the property and the goal is to sell the house, the impact is smaller.
Despite being a more time-consuming process, the sale of the house makes the bills simpler.
Selling the property, the amount received will go towards settling the outstanding balance of the mortgage and the remaining amount will be split between the two. This division is at the discretion of the former couple.
You should be aware that by paying off the loan amount earlier, you may have to pay an early repayment fee. This fee can represent up to 2% of the outstanding amount in fixed-rate contracts, and up to 0.5% in variable-rate contracts.
However, until December 2023, a decree-law is in force that exempts clients with variable rate contracts indexed to Euribor. This measure aims to relieve the budgets of Portuguese citizens with housing credit who have felt the impact of rising interest rates on the increase in their monthly installments.
When one of the credit members withdraws
In case one of the members wants to keep the property, the other will have to dissociate from the home loan. This is so that the remaining holder can become the sole owner of the property.
To do this, the first step is to inform and make the request to the bank, as the bank must authorize this disconnection from the credit contract of one of the borrowers. The person who wants to become the sole owner needs to meet all the necessary conditions to have a mortgage loan alone.
In other words, by transferring co-ownership of the housing loan to a single owner, that person needs to have financial capacity and a sufficient effort rate.
In these cases, banks are not allowed to penalize the spread of the contract if the effort rate of the holder who wishes to keep the house is below 55%, or if they have two or more dependents under their care, below 60%.
Does the withdrawal of a credit holder have costs?
If the bank authorizes the disconnection of one of the holders of the mortgage, the next step is: the holder who keeps the property has to buy the part of the other member.
This value to be purchased is called equity, and it is determined by both through the difference between the value of the property and the value of the loan still to be settled.
However, it may not be possible for the homeowner who ends up with the house to pay the installment immediately. In this situation, an agreement can be reached by negotiating the payment of the amount in installments with the other party; or by paying through other assets, such as a car.
It should be noted that the former spouse who buys the other's share may have to pay the Municipal Tax on Onerous Property Transfers (IMT) or other acquisition taxes, depending on the negotiated amount.
In cases where there is a disconnection of one of the members of the credit, it is natural that this member needs the remaining amount to resort to the purchase of a new house with a housing credit. Therefore, in order to support and simplify this process, using a credit intermediary can be a good option.
If you find yourself in this situation, with doubts and in need of help with the process, Poupança no Minuto credit intermediaries provide a free service, never leaving your side.