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Could the divorce mortgage be coming to America?

One of the most common desires shared by divorcing Texas spouses is the wish to keep the family home. Often, one party desperately wants to retain the house during a divorce but is unable to do so because of financial pressures. A British lending product may offer a solution if and when it finally reaches American shores.

Known as the "divorce mortgage," this product is a loan extended to spouses who are planning to keep their homes but lack the means to buy out the other parties. The borrower is given a lump sum with which to pay his or her spouse for his or her share of the home's equity. In addition, extra funds are deposited in a special savings account to be used for making the initial loan payments.

This type of loan is not a good fit for everyone. Only individuals with steady incomes and the means to repay the mortgages should consider this approach. However, for those spouses who have few assets other than the family home, the ability to take out this type of loan could make a world of difference.

These loans are currently being considered in Great Britain. Should they prove successful there, it may only be a matter of time before similar loans are offered to American borrowers. As with any significant financial decision made during a Texas divorce, spouses who are considering taking on new debt in order to retain the family home should ensure that such a move is in line with their long-term financial goals.

Source: Forbes, "How The 'Divorce Mortgage' Could Help Older Homeowners", Richard Eisenberg, June 1, 2016

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