What happens to the House Loan in case of divorce?

Dealing with House Loan in situations of divorce or separation can be complicated. The phase that the couple goes through is already difficult and having to deal with all the bureaucracy makes things even worse.

Still, when it comes to the house, it's important to know the options available so that you can make informed decisions that do not harm either party!

One option (and perhaps the most common) is to sell the house, settle the debt to the Bank and if any amount remains, divide it between the parties. Note that, in this case, the capital gains must be declared to the Income tax and you may have to pay taxes on the amount received.

There's also the possibility of one of the parties keeps the house and assumes the debt in their name, requesting the dismissal of the other holder. In this case, it's common to agree financial compensation for the one who no longer has responsibility for the credit.

In some cases, one party may assume the debt in full, without the need for compensation to the other party. However, it's important to highlight that this option depends on the Bank's approval.

The bank will have to analyze whether the person, individually, has the capacity to support the House Loan installments alone. Note, however, that in the event of a divorce and if you choose this option, the bank cannot increase your spread. The same does not apply if instead of making an addition to the contract you choose to conclude a new contract.

Furthermore, if necessary, whoever keeps the house can use guarantors or find a new owner with income to assume the debt with them.

Regarding the payment of compensation, this can be done through an agreement between the ex-couple where dates are defined for a phased payment or full or partial payment can be made immediately, if there are other assets to be divided, such as a car.

In any case, it's important to seek professional advice to ensure that all decisions are made in an informed and fair manner for both parties.

Go Crédito

GO Crédito is a company specialized in credit intermediation, authorized and supervised by the Bank of Portugal. We provide credit intermediation and consultancy services quickly and effectively.