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What is a divorce mortgage and what are the benefits?

A new type of financial product may soon hit the market in Colorado and elsewhere in the nation. Known as a "divorce mortgage," it is a new lending approach that could help thousands of people who are preparing to divorce. These types of loans are intended to give divorcing spouses the ability to afford to retain their family home, which is often a priority during a divorce.

The mortgages work by providing the borrower with a lump sum that is used to buy out the other party's interest in the home. Funds are also placed in a special savings account for the purpose of making the mortgage payments for a specified period of time. At the end of that timeframe, the borrower is expected to either sell the property and pay off the loan, or accept the mortgage in full.

This gives the borrower a measure of breathing room when it comes to keeping the family home. He or she can use the time to regain stability in the workforce, or to pay down other debt associated with the divorce. It also allows the party who walks away from the family home to do so without any remaining obligation to the lender.

Divorce mortgages are expected to debut in England in the coming months. If they prove to be a successful lending model, American companies could soon follow suit. While these types of loans may not be a good fit for every Colorado homeowner, they could be a perfect match for some.

Source: Forbes, "How The 'Divorce Mortgage' Could Help Older Homeowners", Richard Eisenberg, June 1, 2016

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Attorney Brandon

Brandon Ceglian

Brandon Ceglian's practice focus is family law, landlord-tenant law / real estate, civil litigation, criminal / DUI, and collections. View Attorney Profile

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J. Adam Beckman

Adam Beckman’s areas of focus are family law, adoptions and prenuptial agreements, and criminal law/DUI. View Attorney Profile

Dominic

Domenic Nicotra

Domenic Nicotra’s practices primarily in the areas of Landlord-Tenant, Family Law, Criminal, Protection Orders, and Civil Litigation. View Attorney Profile

Daniel J. Zolnikov

Daniel J. Zolnikov

Daniel Zolnikov practices in the areas of HOA, debt collections, landlord tenant, civil litigation and construction law. View Attorney Profile