Is now a good time to finalise a Family Law Property settlement?
- 19 Dec 2018
- Property & Financial
It is December 2018. After many years of rising property prices in Melbourne and the rest of Australia, property values have fallen. The Australian and US share markets are also down. Separating couples now have assets (including Superannuation) which are valued at significantly less than the valuation a year ago. However, their debt level would often be at the same level. The net result of this is that there is significantly less to divide up.
If you are looking at keeping the family home as part of a Family Law Property Settlement, the timing may not get better than this (unless the housing market continues to fall in 2019- and opinion is divided about this). If you are looking at refinancing existing debt and paying out your spouse/partner, you would be able to do this today by borrowing a lot less that you would have had to borrow a year ago. This is a good strategy if you earn sufficient income and are able to afford to repay the new level of borrowings. Also, by retaining your existing home in Melbourne, you avoid the costs of purchasing a new home (e.g. Government Stamp Duty which is usually about 5% of the purchase price).
However, the problem you may face is that the Banks may not wish to lend you as much money as they would have a year ago! Any bank considering whether to lend money or re-finance will obtain a current valuation on your property (which may end up being even less than what the figure you are working on). The Bank will also rigorously assess your capacity to repay the loan taking into account all of your other financial commitments. We have had Banks knock back some clients on refinancing recently which has left them in an unwelcome position. Where neither party is able to buy out the other one, then the only way out is for the property to be sold and for the proceeds of sale to be divided in a just and equitable manner. At the end of the process, clients may find themselves not being able to afford to buy housing in the same neighbourhood and, to stay in the same neighbourhood, they are forced to rent.
If you are separated and have not yet finalised a property settlement, it is essential to obtain the best Family Law legal advice available. Telephone Melbourne Family Lawyers on +613 9670 9677 or click on the blue Make An Enquiry button on this page.Back to all Articles & Cases