She says: “[So] many divorces see the higher earner committing to support the other persons living costs by means of maintenance payments, which need to be taken into consideration when applying for a new loan.
“This has the ability to impact affordability and eligibility, potentially limiting the chances of being accepted for credit.”
But she says the specialist lending market can play a vital role for borrowers in these circumstances, where creative and innovative solutions are making a difference to divorcees' needs.
For example, she says there exist products aimed at parents or grandparents helping their children get onto the property ladder, but that these also provide a way for parents to help their children after a major life event such as divorce.
She says such lending products – for example, she cites Vida’s Helping Hand product – have “helped many divorcees stay in their marital home when they perhaps wouldn’t have been able to afford the mortgage after their partner has left the property”.
Additionally, clients can register their home rights with HM Land Registry, which essentially blocks their ex-partner from selling the family home.
However, your client cannot apply for home rights if their spouse or civil partner owns the property with someone else unless their spouse or civil partner would get all the money if the property was sold to become the ‘sole beneficial owner.'
Capital gains tax and other assets
While gifts between spouses are exempt from IHT, a transfer after a divorce may cause IHT issues.
Also, family business interests may need to be restructured to allow one spouse to exit: the cash the leaving spouse receives will be liable to IHT on death unless reinvested in new qualifying business assets.
But clients will usually not have to pay capital gains tax – a tax on the profit after something is sold that has increased in value – on the assets they give to their husband, wife or civil partner.
However, they have to pay capital gains tax on assets transferred to the ex-partner after the relationship ends.
Such assets include shares, certain personal possessions and property; but it is worth noting that clients will usually not have to pay tax if they transfer or sell their main home.
It is possible, though not guaranteed, to exclude some assets from being shared if a spouse had them from before they got married, if they got them after they separated, or if they were inherited, according to Victoria Walker, family solicitor and partner at Moore Blatch LLP.
She explains: “Whether these assets are shared very much depends on the size of the marital pot.
