Separation or divorce are complex processes that affect not only the emotional level but also the financial level. When it comes to a divorce with children and/or a mortgaged home, the decisions made can have lasting implications. In this article, we address the main legal and financial issues that arise in these cases, with particular attention to the ownership of the loan, the ownership of the home, and the use of the family home.
In a divorce, who gets the house? What happens to the mortgage?
It is important to distinguish between a mortgage and a home loan.
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Legally, a mortgage is a real charge registered in the Property Registry that guarantees the fulfillment of an obligation (usually the payment of a loan).
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The mortgage loan, on the other hand, is the financial contract signed with the bank. After a separation or divorce, the mortgage loan remains in effect and must be repaid by the borrowers, regardless of their marital status, whether they live in the mortgaged home, or whether they continue to own it. In other words, the obligation to repay does not disappear with the separation or divorce. Both borrowers will continue to be obligated to repay the loan, and the bank will initially require them to repay it, regardless of who lives in the home or who owns it, unless the bank agrees to release one of the borrower spouses after the divorce, which requires their express approval.
