How a bespoke mortgage affordability report can ease your concerns during a divorce.

Previously, couples going through a divorce would not be asked for their basic financial information until the legal process was underway. “Now however, these brief indicative material reports (BIMS) can be drafted earlier, in the initial stages of separation. This enables couples to gain a deeper insight into their future financial situations,” reveals Diane Fish, associate director at Smith & Pinching in Norwich.

Diane reveals five ways these reports can help make your divorce easier.

1. It sheds light on your financial situation

Divorce proceedings can become increasingly complex once financial matters are discussed. Having a solicitor to guide you through the process is invaluable - adding a bespoke financial report detailing your shared assets can help you understand the impact of separation on your future.

“Our first priority is to find out how we can best advise each person and reach a fair financial conclusion,” Diane explains. “By asking for essential information up front, such as their ability to pay for their own living arrangements, we can draft a comprehensive report that can help both parties reach an acceptable conclusion much sooner.”

Eastern Daily Press: During an emotionally difficult period for both parties, a financial advisor can help to clarify your financial situation and reach a mutually beneficial settlement much quicker.During an emotionally difficult period for both parties, a financial advisor can help to clarify your financial situation and reach a mutually beneficial settlement much quicker. (Image: Getty Images/iStockphoto)

2. It streamlines the negotiation process

When your combined assets include pensions and family homes, or if one person is the main breadwinner, settling may take some time. Calculating how the assets should be split can be done in a number of ways. Your employment status, future earning potential and pension benefits will be taken into account.

It’s essential that you and your legal representatives are aware of the options available. “Highlighting certain financial aspects may help to avoid a lengthy dispute, which can potentially remove the need to go to court,” says Diane.

“Aside from avoiding the costly court fees, both parties may also find there are several financial benefits to negotiating with BIMS. Clients who believed they would not be eligible for a mortgage may be able to borrow based on qualifying state benefits.

“Alternatively, both parties could conclude that one partner retains the family home in exchange for pension benefits," adds Diane. "The clarity that BIMS provide enable both partners to assess their options thoroughly in respect to re-housing needs. Pension sharing involves a different process with separate reports provided.”

3. An early indicator of potential problems

Uncovering areas which may pose an issue during divorce proceedings is another advantage of having a comprehensive financial report drafted. Credit history has become an increasingly vital detail when attempting to get a mortgage, especially after a divorce. Independent financial advisors can help clients and their solicitors identify potential difficulties and recommend how to circumnavigate them.

“Many people are unaware that they have historic credit problems, often due to circumstances outside of their control,” Diane shares. “Setting up a credit report gives people an early indication of their mortgage eligibility, which can be shared with solicitors and taken into account.

“If an individual has credit problems, initially the options may be fewer and the rates higher to reflect this. Sound financial advice is often the first step to boosting your credit rating, getting a mortgage and improving your financial position.”

4. A financial plan that suits everyone

Certain factors may impact mortgage eligibility - age and adverse credit being two of the most common. Despite this, there are a wide array of lending products available for people who have been married for a considerable amount of time and now find themselves in need of a mortgage.

“The increase in people over 50 getting divorced has had a major effect on the entire lending arena,” Diane discloses. “There is now truly something to suit everyone’s individual needs, but identifying exactly how much you can borrow can be challenging.

“Having a mortgage report on-hand at the beginning of your divorce can help to match your specific needs with a lending package, or inform you and your solicitors on the borrowing rates that you are eligible for.”

5. It empowers you and provides peace of mind

Facing potential financial challenges during an emotionally difficult time can feel overwhelming. Financial reports can bring subjects to the surface that are difficult to face, but mortgage advisors are here to help.

“We’ve found that by laying out the facts early on, our clients feel empowered to take action and improve your options,” says Diane. “Building a rapport and ensuring our clients feel they can act on the information we give them is a crucial part of what we do.”

To find out more about mortgage affordability reports, visit smith-pinching.co.uk or call 01603 789966.