Keeping the family home
after separation.

The family home should not be considered in isolation. It sits alongside everything else that may be relevant to the overall property picture, and a decision to keep it can have flow-on effects across the rest of the settlement.

• Mortgages and other secured debts.
• Superannuation in all funds.
• Savings and offset balances.
• Investments, including shares and managed funds.
• Business interests, company shares and trust entitlements.
• Personal debts, credit cards and loans.
• Future income and earning capacity.
• Housing needs going forward.
• Other assets that may be traded off as part of the negotiation.

A person may receive the home but give up other assets, accept less superannuation, or take on greater debt. The phrase “asset rich but cash poor” is sometimes used to describe this: a household that holds significant value in property but limited liquid funds to meet day-to-day costs or emergencies. For the wider framework, see Assets, debts and the family home.

Two separate questions sit behind any decision about the home:

• Title records show who legally owns the property.
• The mortgage records who is liable to the lender for the loan.
• Changing title does not automatically remove someone from the loan.
• An agreement between the parties does not, by itself, bind the bank.
• The lender must approve any refinance or release of a borrower.

One party may remain liable to the bank even after the parties have agreed that the other will keep the property, unless the loan arrangements are formally changed. Until that happens, both names usually stay on the loan and both remain legally responsible for it.

Whether one party can refinance the mortgage into their sole name is a question for the lender. A lender will generally look at matters such as:

• Income and its reliability.
• Employment stability.
• Credit history.
• Existing debts.
• Living expenses.
• Dependants.
• Loan-to-value ratio.
• Current property value.
• Overall serviceability of the loan.

Legal agreement alone does not guarantee lender approval. A mortgage broker or lender may provide practical guidance about what is feasible, but this is separate from legal advice and the two are best treated as complementary rather than interchangeable.

The cost of keeping the home is more than the mortgage repayment. A realistic budget usually includes:

• Mortgage repayments.
• Council and water rates.
• Building and contents insurance.
• Repairs.
• Routine maintenance.
• Utilities.
• Owners corporation or body corporate fees where applicable.
• Land tax, where relevant.
• Refinancing costs.
• Valuation fees.
• Legal and conveyancing costs.
• Emergency repairs.
• Future capital works, such as a roof or hot-water replacement.

Affordability is best assessed over several years, not only by whether the next repayment can be made. A home that is affordable for the first twelve months may not remain so once interest rates, life events or major repairs are taken into account.

Keeping the home usually means finding a way to pay the other party their agreed entitlement. Depending on the circumstances, that may involve:

• Refinancing the mortgage at a higher amount.
• Use of savings.
• Transfer of other assets.
• An adjustment of superannuation.
• Sale of investments.
• Staged or deferred payment arrangements.
• Taking on a larger loan than previously held.

None of these will be suitable in every case, and some may not be available at all. The amount required depends on the overall property settlement, not simply half the equity in the home.

It is easy to assume the equity in a property is the figure available to divide. In practice, several layers sit between market value and the amount that is actually available:

• Market value of the property.
• Outstanding mortgage balance.
• Apparent equity (value minus mortgage).
• Sale costs, such as agent commission and conveyancing.
• Tax consequences, where relevant.
• Other liabilities that may need to be discharged.

As a generic illustration, a property worth $1 million with a $500,000 mortgage does not necessarily produce $500,000 to divide. Once sale costs, refinancing costs or other liabilities are taken into account, the figure ultimately available may be meaningfully lower. This is an illustration only, not a settlement formula.

Keeping the home may involve giving up superannuation or other long-term investments as part of the trade-off. That can have consequences worth thinking through carefully:

• Reduced retirement savings.
• Concentration of wealth in a single, illiquid asset.
• Limited access to emergency cash.
• Greater dependence on future income.
• Ongoing maintenance and property costs in retirement.

This section is introductory and is not financial advice. For more on how retirement savings are generally treated in property settlements, see superannuation after separation. Where the trade-off is significant, advice from a suitably qualified financial professional is usually worthwhile before the arrangement is finalised.

Remaining in the home may offer real benefits for children, including:

• Continuity of school.
• Familiar surroundings.
• Proximity to friends and support networks.
• Reduced disruption during an already unsettled period.

At the same time, housing stability is not only about the building. It also depends on affordability and sustainability. A home that becomes financially overwhelming can create its own instability. It does not automatically follow that the parent who continues to care for the children will receive the home; that depends on the overall property settlement and circumstances.

Sometimes neither party can refinance on their own. In that situation, possible outcomes include:

• Sale of the property.
• Temporary co-ownership for a defined period.
• Deferred sale arrangements, sometimes triggered by a future event.
• A staged refinance once income or circumstances change.
• Short-term occupancy arrangements while options are explored.

Temporary arrangements can create ongoing risk and should be documented carefully. Continued co-ownership after separation is workable in some circumstances but is not something to drift into without clear terms and professional advice.

One person may continue living in the home while property issues are being resolved. Even on an interim basis, it helps to be explicit about:

• Who pays the mortgage and which bills.
• Who is responsible for insurance.
• How repairs are handled and approved.
• Access arrangements, where relevant.
• Responsibility for ongoing maintenance.
• Recordkeeping for payments made during the interim period.
• Whether those payments may later be relevant in the settlement.
• The need for a clear, written temporary arrangement.

Whether interim payments are later treated as a credit or adjustment depends on the circumstances and is not something to assume in advance. For more on the day-to-day question of repayments during the interim period, see who pays the mortgage after separation.

Tax and transaction costs can change the real value of a proposed arrangement. Matters that may need specific advice include:

• Transfer duty concessions that may apply on relationship breakdown.
• Capital gains tax on transfers and disposals.
• Refinancing costs.
• Loan discharge fees.
• Valuation costs.
• Legal and accounting advice.

This guide does not provide tax advice. The point is that the tax and transactional cost of any proposed arrangement is best understood before the arrangement is finalised.

A practical checklist to work through honestly:

1. Can I refinance the mortgage in my sole name?
2. Can I afford the mortgage after realistic living expenses?
3. What other assets would I need to give up to keep the home?
4. Would I retain enough cash for emergencies?
5. What are the likely maintenance and repair costs over the next few years?
6. Is the home suitable for my longer-term needs?
7. What happens if my income changes?
8. What is the effect on superannuation and retirement savings?
9. What if the lender refuses the refinance?
10. Are there tax or transaction costs I have not factored in?
11. Is there a more sustainable housing option for me and any children?

Sale may be considered where, for example:

• Neither party can refinance.
• The property is too expensive to maintain.
• A clean financial separation is needed.
• Funds are needed to rehouse both parties.
• The home is no longer suitable for future needs.
• Retaining it would create excessive debt.

Sale is not a failure or a defeat — it is one option among several, and in some circumstances it produces a more sustainable outcome for everyone.

Any agreed transfer, refinance or sale arrangement should be formally documented. In general terms, that may involve:

• Consent orders.
• Binding financial agreements, where appropriate.
• Transfer documents.
• Lender requirements for refinance or release.
• Implementation steps, with realistic timeframes.

The choice between formalisation methods depends on the circumstances and is best discussed with a suitably qualified professional. Further material on this will appear in the Financial agreements and Mediation guide categories as those guides are published. For practical first steps after separation more broadly, see A calm first checklist.