Julian Finch: Separating couples finding it difficult to split property in current market
Announcement posted by Invigorate PR 16 Oct 2024
Leading lending expert, Julian Finch, founder of Finch Financial, is seeing an increase in the number of couples finding it difficult to split property in the face of high interest rates and a struggling property market.
"Unfortunately, the financial strain being experienced across the market is leading to an increase in the number of couples calling it quits," Finch said.
IBISWorld forecasts the number of divorces to rise by three percent in 2024-25 to 52,846.
"One of the biggest issues for people separating is how to split the home. This is becoming a more challenging issue due to high interest rates, the state of the property market and the rising costs involved in selling," Finch said.
"I am seeing an increase in the number of people coming to me for help wanting to buy out their partner and keep the family home. Unfortunately many people don't have the capacity to take on the whole loan given the state of interest rates so we need to help them look at options."
Finch is a leading money expert, mortgage broker and founder of Finch Financial, Julian Finch. With decades of experience in mortgage brokerage, Finch offers expert insights and advice to thousands of Aussies seeking to get their loan applications approved. His firm, Finch Financial, achieves some of the highest loan approval rates in the country and is known to secure loan approvals within a matter of minutes.
What happens when one person wants to stay in the home/keep the property
"When couples separate, typically there is a Binding Financial Agreement (BFA) or Court directed Consent orders that are handed down. These documents handle multiple things such as custody of children, ongoing child maintenance and division of assets," Finch said.
"Often one party would prefer to stay in or keep the property and this makes financial sense, as long as they can afford to take over the loan and payout any funds to the other party as agreed in the BFA or consent orders.
"A new loan would need to be taken out in the individual's name. The property can then be transferred into their sole name at settlement. Importantly no stamp duty is applicable in this transfer."
Finch stated that while this process appears relatively easy, there are a number of difficulties that people face.
The challenges that many people face
"Unfortunately I often see situations where the person wanting to keep the property is not able to afford the loan on their own. Interest rates have increased since they purchased the property which means that they are not able to meet the necessary financial requirements," Finch said.
"Sometimes there is also an equity issue in the property, which may cause problems with meeting the full details of the Financial Agreement. While things may seem dire, most of the time I am able to work with people to help them solve the situation."
Solutions to help solve the challenges
"It is important to look at the situation and work out the best way forward for the person wanting to stay in the home. While we are able to solve most things, sometimes there is no way to solve it and the couple need to sell everything and start over," Finch said.
"Whenever I speak to someone who is in this situation, I ask them if it is possible to put their differences aside for their mutual financial benefit.
"Maybe the couple can hold on to a property with their joint incomes and become investment partners. It sounds like a stretch but when you take into account the costs of selling a property, the time lost in the market when trying to re-establish yourself and then the added cost of stamp duty for a new purchase for both parties, the bill can escalate into the hundreds and thousands of dollars. This is not always considered.
"I have also seen examples where one of the couple's parents has joined the title and enabled one of the parties to keep the property.
"I have seen examples where couples helped each other retain the original property and then co- own another property so that they can both own a stable place of residence so their kids have some security and stability."
Finch explained that there are many great ways to solve this problem if people are able to set aside their differences for financial advantage. There are also many lenders in the market that have different lending requirements. This is where working with a broker comes to the fore. A broker is often able to connect you with a lender that better suits your circumstances.
About Finch Financial Services
Based in Hurstville, NSW, Finch Financial Services has been servicing Australian families and businesses with home, personal and commercial loans as well as asset finance services since 2015. Ranked amongst the top five percent of brokerages in Australia according to data from the MFAA, Finch Financial Services is a leading brokerage and family-owned business that specialises in finding its customers loans that are tailored to their needs and goals.