Who keeps the low rate mortgage?

July 7, 2023

A former couple has made the difficult decision to terminate their marriage. In the past, one party would typically move into a newly purchased or rented home. However, due to the high cost of living, couples are increasingly compelled to continue living together while leading separate lives.

In an article published by The Telegraph on July 4th, 2023, titled "The New Divorce Battle: Who Gets to Keep the Low Mortgage?", the couple in question sat down to meticulously examine their joint finances. To their dismay, they quickly realised that living apart was simply unaffordable. The burden of maintaining two separate households was too great to bear.

The recent surge in historic interest rates has further exacerbated the financial strain on households. Presently, a typical 5-year fixed mortgage deal carries an interest rate exceeding 6%. This development follows the Bank of England's decision to raise interest rates to a 15-year high of 5% the previous month (June 2023).

This predicament has been aptly dubbed the "Remortgaging Cliff." Individuals find themselves unable to afford their existing mortgages, let alone the additional financial pressures stemming from separation, divorce, childcare, and the ever-rising cost of living.

Legal experts, as cited in The Telegraph article, assert that financial settlements will become increasingly arduous and complex, particularly in cases where every penny holds significant value. Some couples are rushing to finalise their divorce and financial arrangements in order to take advantage of fixed-rate mortgage deals. Conversely, others are adopting a wait-and-see approach, hoping for a decrease in mortgage rates.

The Telegraph highlights that the financial strain experienced by couples has compelled them to reevaluate the concept of "clean breaks."

Telegraph - The new divorce battle: who gets to keep the low mortgage? - 4th July 2023

BBC News - Mortgage rates: Average five-year fix rises above 6%. - 5th July 2023

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