Mastering a (financial) divorce

In this article, Klår Finance shares tips to help you achieve an amicable divorce, with a focus on a critical part of the separation process: your finances - particularly your home and mortgage.

Sometimes relationships take an unexpected turn, leading you and your partner to conclude that being apart is better than staying together. It’s a tough and emotional decision, but it can also bring a sense of relief.

There’s a Dutch saying "scheiden is lijden", which means “divorce is suffering”. It highlights the difficulties that often arise from a breakup. However, this doesn’t have to be the case.

Imagine a divorce you can secretly be proud of! Doesn’t that sound like music to your ears? Here’s how to make it happen.

Step one: Master the plan

Do you own a home together? If so, you’re likely co-owners, each holding 50 percent. What’s the plan? Will you sell the house, or will one of you buy out the other? Are there children involved? What’s best for them? These are just some of the crucial matters to address.

As with most things in life, preparation is key to achieving the best outcome. Create a master plan: try to agree on how to divide your assets, debts, and - if applicable - childcare responsibilities.

Sounds easier said than done? For many, it is. That’s where the help of a mediator can be invaluable. A mediator provides an objective perspective, offers legal expertise and guides you toward a harmonious resolution. They can also help draft a divorce settlement agreement.

Step two: Assess the financial feasibility

Once you've agreed on the broad strokes of the settlement, it’s time to test the financial feasibility. If one of you plans to stay in the home, can they afford it? If the other plans to buy a new home, what’s their budget?

Keep in mind, often there is more possible than you think. Mortgage lenders may offer some flexibility in divorce situations, and there are multiple solutions out there. For example:

• One partner might take over the entire mortgage
• The mortgage amount on the existing home might be increased to enable a buyout (in case of surplus value)
• Favourable mortgage terms may be retained or even (partially) transferred if one partner buys a new home

The possibilities depend on your unique situation. Lenders will consider your income (including any spousal support), the home’s value, and your available assets.

Step three: Complete the official documentation

If your master plan is solid and financially viable, it’s time to make the separation official. The required documentation varies depending on whether you’re married or cohabiting under a partnership agreement.

If you’re married, you’ll need the following:

• A divorce settlement agreement (usually prepared by a mediator)
• A parenting plan (if children are involved)
• A divorce decree (an official court ruling)
• Registration of the divorce in the civil registry (making it official)
• A deed of division (for the transfer of jointly owned property, prepared by a notary)
• Pension division documentation (if applicable)

If you’re cohabiting but not married, you’re in luck - only a deed of division is required to transfer ownership of the co-owned home.

For this step, patience is key! You’ve already handled so much, and you’re eager to move forward. Stay cool - you’re almost there!

Step four: Focus on the future

The divorce is finalised! Now it’s time to look ahead:

Will you turn your shared house into your own "new" home?

Thanks to step two, you have a clear view of your total budget for achieving this. Now, gather the official documents and complete the mortgage process with your lender.

Ready to settle in a new home?

Thanks to step two, you have a clear view on your total budget for achieving this. Whether you’ve already found your dream home or are just beginning your search, you now have all the necessary documents to arrange your mortgage.

If all of this sounds complex and something you would like to get advice on, contact Klår Finance for assistance. They can help you make the right decisions and make sure you gain clarity and focus.