Life After Divorce
This week’s podcast looks at life after divorce from a financial point of view, with insights from Michelle Costello, mortgage advisor, and Jamie Benn, financial advisor.
Divorce is a fact of life – it happens to a lot of people. It’s even a little easier now that you don’t have to give a reason for divorce. It can certainly be a challenging time and it’s different for everyone.
Some people going through divorce are prepared for it and it’s been a long time coming. But in other situations it can be much more sudden. It can create a panic situation if you weren’t expecting it.
It’s never a nice thing to go through, even if things are amicable. It’s all very serious. You’ve got solicitors looking at you, your life, parenting, your children, your relationship and more.
You’re stepping into a complete unknown. There’s that fear factor – ‘what is my future going to look like?’ Plus, there’s usually one person in a relationship that looks after the finances. If you’re not that person, you can feel a little bit silly that you don’t really know the details. But that’s nothing to worry about, we see it all the time.
There’s much more to divorce than the financial side
If you have a family, you’re going to be more worried about your family members and children and what they might be going through emotionally.
The financial element of things, especially in an amicable divorce, can fall quite low on your priority list. But good advice and starting things early can make a very big difference. We’ve got to make sure, as with everything, that you’ve got a process in place that will support you and do the best for you.
No-one walks down the aisle thinking that they need to keep a handle on the finances, in case they ever divorce. But if you’re not used to dealing with finances, you might not understand how to set up a pension, how much you have already saved, how to get a mortgage etc.
There’s a lot of uncertainty on both sides which heightens the stress. Divorce is one of the top three most stressful life events.
Your solicitor and financial advisor are two crucial supporters
For somebody going through divorce, the two main players to help you are a solicitor and a financial advisor.
The two potentially go hand in hand. You get financial advice and legal support and then check it through with the other party to confirm that everything looks fair from both sides.
You will want to be clear that financially you’re going to be all right. You can get that advice from someone like Jamie, who will look at your pensions and investments and help you understand and untangle all of that.
Then, looking at the mortgage side of things, we can help you buy another property or keep your home, check what’s viable, what it will cost you, etc.
Trying to figure out percentages of the pension fund that you have to allocate to each individual, what to do with it next, picking your own pension … things like this add so much pressure. Having somebody like us to chat things through with, is invaluable.
Seek advice as soon as possible
There’s nothing worse than trying to do something yourself and then realising halfway through the process that you can’t do it.
When you involve a financial adviser you might have already gone down the wrong path and agreed things already – you might need to unravel what you’ve done. So it’s much better to get the experts involved from the start.
We will always explore from the outset what you want to achieve, what the options are and how to progress with them. It’s actually much less stressful having someone on your side looking after things. We’re here to help and support you, with empathy.
Getting a Mortgage Capacity Report
If you will need to get a mortgage as part of your post-divorce planning, one of the elements you will need is a Mortgage Capacity Report. This is a little like an Agreement in Principle that’s needed when you make an offer on a home.
But this is more detailed. It’s a formal report that can be passed on to your ex-partner and used by the solicitor to influence the divorce settlement. It looks at the affordability of a mortgage with the lenders we work with, to establish how much you can borrow. If there are children involved, the affordability calculation will include maintenance payments.
There’s a lot to consider. If you currently work part time, for example, you may need to go to work full time to manage the mortgage in you own name.
The different options are documented, which puts you in a stronger position. Any settlement needs to work around these numbers. It means you can say that from the different options available, option C is the most realistic of how things are going to work out. So you need a settlement that allows you to go with option C.
It’s a powerful tool – it’s professional and impartial. As an adviser, I’m going to give the facts based on what the lenders will allow. It’s all about making sure that you can get the best outcome for you and your dependents moving forward.
Financial advice gives you stability and hope
Once you have a clearer picture of your financial situation, and where you stand on getting a mortgage, you can start thinking about the future. That always gives our clients much more hope. There is life after the divorce. You can start looking at houses and find somewhere to move on to.
It’s reassuring to know that you will be financially stable and secure after the divorce settlement has gone through. When anyone is dealing with stressful situations, they look out for hope – that’s just part and parcel of being a human being. But that’s what we’re here for, just like solicitors, to show you what life will look like after this traumatic time.