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Mortgages for Divorcees

Getting a mortgage after divorce: the facts

With the Mortgage Market Review (MMR) imposing stricter affordability criteria for potential home buyers, specific groups of people are finding it harder to obtain a mortgage, namely older borrowers and the self employed. Due to the way that many lenders assess affordability, divorcees are the latest group to join these socalled ‘mortgage misfits’. The issue here is that many lenders exclude child maintenance payments from their assessment.

With almost half of all divorced couples having at least one child under 16, child maintenance payments can account for a significant proportion of income for a lone parent, particularly if they need to work reduced hours in order to care for the child(ren). Lenders who do not take into account income sources such as child maintenance payments are therefore limiting the accessibility of mortgages to divorcees

Ipswich Building Society is one of the few lenders that takes into account 100% of child maintenance  payments in addition to employment income and will also consider an applicant’s evidence if they routinely spend less than the national average on specific items, offering greater choice of mortgage products to divorcees and lone parent households. Here the Society highlights the key facts about this growing mortgage misfits group:

1. Nearly half of marriages end in divorce, and most couples will divorce in their midforties, or by their twentieth wedding anniversary

a. 42% of married couples will separate through divorce
b. Just over a third (34%) of marriages break down before the twentieth wedding anniversary [Source: Relate]
c. Men are most likely to become divorcees aged 45, for women, the average age is 42 [Source: Office of National Statistics]

2. Women bear the brunt of divorce

a. Women are most likely to take on the majority of childcare responsibilities after a divorce [Source: Office of National Statistics]
b. The average woman’s income drops by more than a fifth following divorce, in contrast, male income rises by a third [Source: Stephen Jenkins Report]

3. The majority of divorces involve children

a. 48% of these couples have at least one child aged 16 or under [Source: Relate]

 

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