Who Pays for the Mortgage After a Separation?
When a relationship ends, financial responsibilities don’t simply disappear—especially when there’s a mortgage involved. Whether you’re married, in a de facto partnership, or co-owning a home with a partner, separating can create major uncertainty about who is responsible for ongoing loan repayments.
In New Zealand, property owned during a relationship is typically considered relationship property. That means the mortgage on that home is usually a shared responsibility—regardless of who made more of the repayments during the relationship. Here’s what you need to know if you’re facing a separation and wondering what happens to your mortgage next.
Joint Mortgages Mean Joint Responsibility
If your home loan was set up in both names, then you are both jointly liable for the full amount of the mortgage. That’s true no matter who was the primary income earner or who physically lived in the house.
From the bank’s perspective, there’s one bottom line: they want their repayments on time and in full. It doesn’t matter what informal arrangements you’ve made with your ex-partner. If payments are missed, the bank can pursue either party for the full amount.
This can be frustrating, especially if you’re keeping up your side of the payments while your former partner is not. But joint liability means both parties are considered 100% responsible.
Keeping the House: What Are the Options?
After a separation, there are a few pathways forward when it comes to the property:
Sell the home and repay the mortgage. This is the cleanest option. Once the mortgage is repaid, any leftover proceeds can be divided as part of the broader asset split.
One person keeps the home. In this case, the person retaining the property will usually need to “buy out” the other’s share. This means refinancing the mortgage into their name only, and paying the departing partner their share of the home’s equity based on its market value.
Joint ownership continues. Some couples decide to keep the property jointly owned for a time—perhaps turning it into a rental, or having one person live in it and pay rent. While this arrangement can work, it requires clear legal agreements and good communication to avoid future conflict.
Whichever option you choose, it’s important to seek advice from a lawyer and mortgage adviser early in the process. Refinancing, valuations, and repayments all take time and need to be planned carefully.
The Risk of Missed Payments
Separations can bring emotional and financial upheaval, and mortgage payments are often one of the biggest monthly expenses. But the consequences of missed or late payments can be serious.
Even if only one person defaults on the mortgage, both credit records are affected. That means your ability to borrow in the future—for a new home, car, or business—could be compromised.
In worst-case scenarios, the bank may initiate mortgagee sale proceedings, putting the home at risk. That’s why it’s critical for both parties to maintain clear communication and honour their financial obligations, at least until a new arrangement is formalised.
Protecting Your Credit Score
Your credit report reflects your repayment history—missed payments, defaults, and even high levels of debt can all impact your score. And with joint mortgages, the actions of one party affect the other.
Unfortunately, this means you can suffer credit damage even if you’re meeting your obligations, but your former partner is not. To mitigate this risk:
Maintain open lines of communication
Consider setting up a formal legal agreement about payments
If possible, close or refinance joint loans as soon as practical
Monitor your credit score regularly to track any changes
Working Together Despite the Split
Separating is rarely easy, but handling your shared mortgage doesn’t have to lead to additional hardship. A collaborative approach—at least until financial matters are resolved—can prevent damage to both your finances and your wellbeing.
Here are some practical steps to take:
Talk to your lender. Let them know about the separation and ask about possible repayment flexibility.
Speak with a mortgage adviser. They can help assess whether refinancing is possible for one partner to retain the home.
Seek legal advice. A lawyer can help draft agreements and ensure your rights are protected throughout the property division process.
You Don’t Have to Navigate This Alone
Managing a mortgage after a separation involves legal, financial, and emotional complexity—but support is available. From advisers to family lawyers, having the right professionals in your corner can make all the difference.