After separation in Australia, both you and your former partner remain legally responsible for the mortgage if it is in both of your names.
Even if one of you moves out, the lender still expects repayments to be made as per the loan agreement.
How the mortgage is paid after separation depends on several factors, including who continues to live in the home, financial circumstances, and any agreements or court orders regarding property division.
If mortgage payments are missed, both parties’ credit scores can be affected, regardless of who resides in the property.
Understanding Mortgage Responsibility After Separation
If your mortgage is in joint names, both you and your ex-partner are legally required to continue making payments until a formal property settlement is reached.
The bank does not take relationship status into account—if repayments are not made, both parties may face financial consequences.
In some cases, one person may agree to take over the mortgage, or both parties might share payments until the property is sold or refinanced.
If you and your ex cannot agree, the court may decide how mortgage payments should be handled.
Key Takeaway: Regardless of separation, if your name is on the mortgage, you are still responsible for payments until a new agreement is in place.
Options for Managing the Mortgage After Separation
1. One Person Continues to Pay
If you plan to stay in the home, you may agree to take full responsibility for the mortgage. However, this usually requires refinancing the loan into your sole name, which means you need to prove to the bank that you can afford the repayments on your own.
2. Shared Mortgage Payments
If both of you are still financially linked to the mortgage but neither can afford to pay it alone, you might agree to share the payments until the house is sold or refinanced. This arrangement can be formalised in a legally binding agreement.
3. Selling the Property
If neither you nor your ex can afford to take over the mortgage, selling the property and splitting the proceeds may be the best solution. The funds from the sale can be used to pay off the remaining mortgage, with any leftover money divided according to a property settlement agreement.
4. Renting Out the Property
If moving out is necessary but you both want to keep the property, renting it out could help cover mortgage repayments. However, both parties must agree on how rental income and expenses will be handled.
5. Court Intervention
If you and your ex cannot agree on who should pay the mortgage, the court may step in. A judge can decide how payments should be handled based on financial circumstances and the best interests of any children involved.
Key Takeaway: There are several ways to handle the mortgage after separation, but an agreement should be reached to avoid financial hardship.
Need a Lawyer?
What Happens If Mortgage Payments Are Missed?
If mortgage repayments are not made on time, the consequences can be serious for both you and your ex-partner, including:
- Damage to Credit Scores – Missed payments affect both parties’ credit ratings, making it harder to borrow money in the future.
- Bank Repossession – If payments stop altogether, the bank may take legal action to repossess and sell the property.
- Legal Disputes – If one party refuses to contribute to the mortgage, the other may seek legal action for financial relief.
To prevent these issues, it is important to reach an agreement as soon as possible, even if it is temporary. If you are struggling financially, contacting your lender early may allow you to negotiate hardship arrangements.
Key Takeaway: Missed mortgage payments can have serious financial and legal consequences for both parties, so it is best to reach an agreement quickly.
How Property Settlements Affect Mortgage Payments
A formal property settlement determines who keeps the house and how financial responsibilities are divided. This can be negotiated between you and your ex, or it can be decided by the court if no agreement is reached.
Possible Outcomes in a Property Settlement:
- One person keeps the home and takes full responsibility for the mortgage.
- The property is sold, and proceeds are divided based on the settlement terms.
- The home is retained as a shared asset, with an agreement on how expenses will be managed.
Until the property settlement is finalised, both parties usually remain responsible for the mortgage. Seeking legal advice can help you understand your options and protect your financial future.
Key Takeaway: A property settlement legally determines who is responsible for the mortgage, but until it is finalised, both parties must ensure payments are made.