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The former matrimonial home – To keep or not to keep?

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By Lauren Patford-Smith, Lawyer, MST Lawyers

One of the first questions lawyers are often asked by their client facing a family law property settlement is if he or she should keep the former matrimonial home? 

Lots of different factors are at play when deciding whether or not to keep the house and these can usually be broken down into two categories – the emotional and the financial.

Clients need to consider the following:

  • How big is the house?
  • What is the debt on the house?
  • Can you afford to make the monthly mortgage repayments?
  • If you keep the house and something breaks – something big – can you afford to make the repairs?
  • Can you afford the cost of maintenance?
  • Will you be able to refinance the mortgage and put it into your own name?

Clients should also consider that we are not in the same economic climate as we were five years ago and refinancing is not as easy as it once was.  For example, if you are a person whose livelihood is going to be made up mostly of Child Support and Centrelink benefits, you may not be someone to whom the bank is comfortable offering a loan.  Even if you could afford it, will you be able to refinance into your individual name?

Next, is there enough cash available in the asset pool to buy out your spouses share of the house? Or if there’s not enough cash, should you trade another asset, like superannuation for the equity in the house? Is it a wise investment?

When there is a shortfall in what the house is valued at and what the current mortgage is, a decision of whether to keep the house may come down to which spouse is in a financial position to refinance the house and whether they can afford to make the monthly mortgage repayments.  If neither party can afford to make the mortgage repayments and upkeep, the house will have to be sold.

If you want the house, you can afford it and there are enough other assets to make sure that there is still an ability to divide the asset pool so that each party receives their entitlements, then this may occur. 

There is no universal right answer, regardless of who planted the tree in the backyard, how many lines are drawn in the kitchen doorway to mark your child’s growth and where you taught your son to ride a bike.  Keeping the house is a major financial decision, just like buying it probably was. All the factors should be considered including our economy and its impact on the real estate market.

For further Family Law advice, please contact our Family Law team on (03) 8540 0200.