This should only be taken as general information and you should seek legal advice in your specific situation.
When a Family has gone through separation and divorce as a part of the settlement they may need to divide assets between parties within the relationship. in Australia both the Family Court and Federal Court deal with property settlement matters, and in both cases they apply the Family Law Act when determining a property settlement between married couples and de facto couples.
In general, the court will use a four-step approach to determine the outcome of a property settlement. These include (1) What Assets you have and their value? (2) How did you get them? What the contributions were? (3) Other Factors to consider and (4) Is the overall division appropriate and equitable?
There is no precise science or template for property settlements when they go through the court system, however once a decision has been reached and a divorce has been finalised they have a maximum time limit to complete a property settlement. The Family Law Act 1975 sets a time restriction of 12 months after a divorce to make an application for property settlement, and this may be different in individual cases so as a borrower and a home owner you need to make sure you have got your finances in order and ready to go once a settlement has been reached.
How do I transfer the property into my own name?
Once the Property Settlement has been determined by the court you need to start the process of getting the property in your name. That’s when you can catch up with a Discovery Finance Specialised Broker to look through your current situation, look at what you want the outcome to be and assess your current borrowing capacity to provide specific finance options.
As your income and asset situation would have changed from when you previously applied for the loan with your partner we would need to get an updated statement of position, or assets and liabilities as well as get your updated income information such as your most recent payslips, group certificate and tax return to confirm current income. We would also sit down and complete a budget to get an understanding of your current living expenses. Based on this we can determine your maximum serviceability amount, or the figure that the banks will lend to you based on your situation.
Will a bank give me a loan based on my income alone? What if I’m not working?
Since the National Consumer and Credit Act 2009, the banks assess all applications on a borrower’s capacity to repay the loan, as opposed to an asset lend like they may have previously done. As such we need to make sure you have enough income coming through ongoing to make your loan repayments and cover your other obligations and living expenses like rates, school fees and discretionary living expenses.
If you are working we can use your income towards the loan application, alternately if you are not working we may be able to use Child Support or Maintenance income, plus Family Tax Benefits depending on the age of your children. This is verified by obtaining a letter from the Family and Community Services department, or Statement from Centrelink.
Each borrower’s situation is going to be different, and also depends on other loans and liabilities, how many children you are supporting and what the total income is so it is best to speak with one of our Divorce & Property Settlement finance specialists that can let you know what lenders will consider which income, and the option that will be suitable for you.
My bank has said I can’t get a new loan, what happens?
Different banks assess various incomes differently. Some banks, for example, don’t allow shift workers to claim regular overtime, or bonuses if they aren’t paid monthly so it is best speaking with one of our Divorce and Property Settlement Loan Specialists to see what we can structure up and which bank fits best with you. There have been cases where the difference between one bank’s borrowing calculator to another can have variances of up to a few hundred thousand dollars, so it is smart to speak with one of our brokers who can compare multiple bank options quickly, and help reduce your stress and workload during this difficult process.
Do I have to pay stamp duty again to transfer a property after divorce?
According to the Queensland Government under the Family Law Act, you don’t have to pay transfer duty on transactions that are under a court order or financial agreement made under certain sections of the Family Law act 1975. This is providing the court order or financial agreement has been sealed, and must be a valid order or agreement, pre-date the transaction, specify the property being transferred and clearly state who the property is being transferred to. This can also apply to de facto relationships under certain circumstances,
Why would we use Discovery Finance Brokers and not go through our bank?
This is a particularly difficult and stressful time for anyone. We have helped lots of other clients in similar situations where they are going through a Divorce and we reduce your stress and workload by doing the running around for you, we have strong relationships with the lenders that are more accommodating to people going through a divorce and offer solutions to help you get through this trying time. Our focus is on long-term relationships with our clients, using our specialised knowledge by providing simple, tailed and transparent financial solutions.
My team and I would welcome the opportunity to assist you and your family during this very difficult time. Please do not hesitate to get in touch with us.
Thanks, Jayden Vecchio. Director, Discovery Finance Group. 0421 874 357, or contact our team on 1300 88 73 28.