A separation or a divorce causes upheavals in the life of a household. Revenues change and common credits must be liquidated. The purchase of credits provides an ideal solution, depending on your personal situation.
Separation, divorce, credits must be redistributed
During a divorce, the dissolution of a PACS or a separation, it is very common that the old partners need to review their budget. What was once done to two, must now be divided and each must bear his expenses.
In most cases, couples, when it comes to their property, subscribe to a common home loan where everyone is a co-borrower. The co-borrower by his status is surety of the mortgage until the total refund of it. In the event of a break-up, it is therefore important to separate from the credit, but this requires the agreement of your bank first.
All credits taken together or individually for common property must be cleared and redistributed among the parties.
For the real estate property, three solutions are available to cohabitors:
- Sell the property and everyone recovers its share in proportion to what it has invested and after repayment of the mortgage (in the case of a good separation regime)
- Keep the property undivided (this implies a very good agreement)
- Redeem spouse’s share (buyback of cash)
The redemption of balance
It is not uncommon to see, in cases of breakdown, one of the spouses want to keep the real estate property acquired in common. This is allowed thanks to the purchase of balance. The balance is an amount paid to the co-owner of the property that sells his share to compensate him for his loss of wealth.
The operation is simple: one of the spouses acquires the share of the other. However, it is important to respect certain steps.
The property must be considered as accurate as none of the parties feel aggrieved. The best is to call on a real estate expert totally transparent and who will value the property without influence. This estimate will determine the amount of the rebate.
Procedures to follow:
Very often, the property has been purchased on credit and the credit is not completed. In this case, it will be necessary to ask the bank for a loan unbundling. She can refuse if she thinks you will not be able to repay the credit alone. Indeed, the credit was subscribed with two salaries and the monthly payment is in function. The best solution is then to request the full repurchase of the credit and to be able to adjust the monthly payments and the duration of the credit.
The balance is calculated as follows: (Value of good / 2) – (Remaining capital / 2)
Example: A couple separates and their house is estimated at 250 000 €. After asking for an amortization table from their bank, they find that they have 70 000 € of mortgage to pay: amount of the payment: (250 000/2) – (70 000/2) = 90 000 €
The amount to be paid to the one who sells his part of the good will be 90 000 €
The financing for the one who buys the ownership share is 90 000 € + 70 000 € (capital remaining due) = 160 000 €.
The credit surrender amount will therefore be € 160,000 if the borrower wishes to finance the property in full on credit. To this sum are added, notary fees, separation fees and any early redemption fees.
The new credit therefore only includes the new name of the owner and the monthly payments are adapted to his income. The property then becomes the full property of one of the parties.
The redemption of credits, an ideal solution in case of break
The redemption of credits allows borrowers to consolidate their old loans under a single monthly payment. After the separation and the sums of credits redistributed, the redemption of credits allows both parties to completely redevelop their debts, in a single credit perfectly matching their income. It also allows you to include, if revenues permit, the financing of a new project or cash to meet future expenses. The financial equilibrium can then be found.