“We are happy to work to your timetable and will provide assistance and encouragement as required, without seeking to push the transaction through until all details have been resolved.”
Separation is an unpleasant but unavoidable part of life for many Australians. Unfortunately, combined finances can further complicate an already painful and sensitive situation.
When a couple decides to end their relationship, the next step towards separation can seem confusing – and the prospect can be stressful to approach. What if you have a joint mortgage? What are your options when considering future loans? What will you need to consider in terms of borrowing capacity?
We spoke to one of our clients about their finance journey through separation, as well as our senior finance broker Martin Ryan about his experience advising clients who are separating and factors to consider when partnering with Aviser Finance for the next chapter in your finance journey.
The Client’s Journey:
Aviser Finance: Can you briefly describe your situation when you partnered with Aviser Finance?
Client: Separated after twenty years, with three kids.
AF: What solution did Aviser Finance offer you?
C: By reviewing my circumstances and finances, Aviser Finance arranged a refinance to purchase my own property.
AF: How did Aviser make the process easier for you and your ex-partner?
C: By taking time to understand our circumstances and what we were looking for, Aviser were able to offer a good product solution that suited both of us.
AF: What makes Aviser the better choice compared to other lenders?
C: A personal level of service, coupled with taking time to understand what I was looking for – they made the whole experience much easier than going with an impersonal bank lender.
AF: What advice would you give to clients who are separating and unsure about the status of their loan?
C: Work with a trusted mortgage broker who will take time to help you understand the potential you have and how to navigate the needs of lenders.
The Broker’s Perspective:
Aviser Finance: Can you give us a recent story of finding a financial solution for current clients who have recently separated?
Martin: The story is usually similar for most people. They decide to “consciously uncouple”, and one partner wants to retain the marital home. The usual thinking is to provide stability for their children. There is merit in this, but it can be quite a journey as they need to remove their ex from the title and the loan. We also need to plan out increasing the borrowing to pay the ex-partner their share of the equity in the property. The logistics and numbers are one part of the equation, but the emotion and uncertainty of a new future are the other part of this significant picture – and we strive to be respectful and supportive of this, too.
AF: What challenges did you experience finding these solutions for your clients?
M: The challenges are usually borrowing capacity and equity. They require a bigger loan, only have one income instead of two, and they often have at least 50% custody of children, which, from a lender’s perspective, equates to 100%. At an early stage, they may not have a sufficient track record of child support being paid for us to utilise it. If they originally borrowed at 80% of the property value, then a few years later, there may not be sufficient equity to take out without going over 80% of the property value and incurring lenders’ mortgage insurance. The increase in interest rates over the last year-and-a-half has put downward pressure on borrowing capacity. We do a lot of research and strategising to ensure our clients are feeling supported and informed along the way and set them up in the most advantageous, secure way for their future.
AF: What advice would you give couples who are separating and need to change their shared loan as a result?
M: Get clarity around why you want to retain the family home and whether it is the best strategy. Minimize your living expenses to maximize your borrowing capacity. Get us involved as early as possible so we know whether you can borrow sufficient funds with your current situation or whether we need to reduce debt, living expenses, etc. Maximize your income and take on overtime extra duties if necessary. These may dictate the terms of your binding financial agreement – there’s no point in signing up for an agreement that we can’t assist you in complying with.
AF: What sets Aviser Finance apart from other lending bodies when it comes to time-saving/additional support/empathy for clients?
M: This is a transaction we have, sadly, completed many times. Our experience and expertise will provide clarity and reduce stress, whereas working with an inexperienced broker may increase stress as they are learning on their clients as they go – this can mean continual reworking as they peel back the layers of what they don’t know. We are able to assess your eligibility for any government assistance, which can be very valuable. We understand the stress borrowers are under at this time. Our communication is regular, so you remain up to date with the progress of your file. Our communication is sensitive to both separating partners and is without blame or judgement. We want the best outcome for all involved. We understand the legalities of unwinding a relationship and that this can take time. We are happy to work to your timetable and will provide assistance and encouragement as required, without seeking to push the transaction through until all details have been resolved.
AF: What is the most satisfying aspect of finding these financial solutions for separated couples?
M: Reducing the amount of stress at potentially the most stressful time of their lives and giving them the freedom to move on.