I got divorced: What happens to the mortgage credit?

Divorce and mortgage credit: How does it work?

In case of divorce, a joint home loan is one of the issues to deal with, along with the sharing of assets. But the solution to take will depend on whether any of the couple in the process of separation wants to keep the property.

When selling the property

If neither member wants to keep the property, and the goal is to sell the house, the impact is lower.

Despite being a longer process, the sale of the house makes the accounts simpler.

Selling the property, the amount to be received will go towards paying off the outstanding amount of the home loan and the remaining amount will be split between the two. This division is at the discretion of the ex-couple.

You should be aware that by paying off the loan amount early, you may have to pay a prepayment 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 customers with variable rate contracts indexed to Euribor. This measure aims to ease the budgets of Portuguese homeowners with mortgages who have felt the impact of rising interest rates on their monthly payments.

On the dissociation of one of the members of the credit

In the event that one of the members wants to keep the property, the other will have to detach from the mortgage. This is so that the remaining holder in the house becomes the sole owner of the property.

For this, the first step is to inform and make the request to the bank, since the bank must authorize this disconnection from the credit contract of one of the borrowers. And, for that, the holder who wants to become the sole owner needs to meet all the necessary conditions to have a housing loan alone.

In other words, when transferring co-ownership of the mortgage to a single holder, they need 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 account holder who wants to keep the house is below 55%, or if they have two or more dependents under their care, below 60%.

Does the departure of a credit holder have costs?

If the bank authorizes the release of one of the holders of the home loan, the following phase begins: the remaining holder must purchase the other member's share of the property.

This value to purchase is called equity , and it is determined by both through the difference between the value of the property and the outstanding loan balance.

However, it may not be possible for the owner who ends up with the house to be able to pay the transfer tax immediately. In this situation, an agreement can be reached by negotiating with the other party to pay the amount in installments or by paying with other assets, such as a car.

Note that the ex-spouse buying out the other party may have to pay the Municipal Tax on Onerous Property Transactions (IMT) or other taxes on the acquisition, depending on the negotiated value.

In cases where there is a disengagement of one of the credit members, it is natural that this person needs the amount of the surcharge to resort to the purchase of a new house with 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, have doubts and need help in the process, the credit intermediaries from Poupança no Minuto provide a free service, never leaving your side.