“I only need to borrow my share” — why the new loan is bigger than your client thinks when a separating couple splits two properties.
This one comes up every time a separating couple divides two properties. One partner keeps the family home, the other takes over the investment. The client tells you their share is $200,000, so they just need a $200,000 loan. That number is almost never right, and if the application goes in at the client’s figure it comes straight back to you.
Take the worked example: Joe’s agreed share is $200,000, but the property he is taking over is worth $600,000 and already carries $300,000 of debt in his ex-partner’s name that has to be repaid on transfer. For Joe to end up holding exactly $200,000 of equity in a $600,000 property, his loan has to be $400,000. Value minus agreed equity equals loan — there is no way around it. Put the application in at $200,000 and the servicing calculation changes mid-stream, and everyone loses weeks.
If a separating client asks for a loan equal to “their share,” pause before it goes near a lender. Ask three things: what the property is worth, what debt sits on it now, and what equity split the couple actually agreed. Those numbers fix the loan. The gap then closes one of three ways:
The couple needs to have consciously picked one before anything is signed, and the paperwork has to exist.
