Separation and divorce is a major life event that often comes with both emotional and financial upheaval. One of the most pressing concerns for separating couples in Scotland is what happens to a jointly owned home, particularly when one person wants to keep the property and take over the mortgage on their own.

Unlike some parts of the UK, Scotland has its own legal system and process for dealing with divorce and financial settlements, including property division. Understanding how the system works can help make a difficult situation more manageable.

Understanding Matrimonial Property
In Scotland, the home you share with your spouse — known as the matrimonial home — is typically considered matrimonial property if it was acquired during the marriage. This means it is subject to division, regardless of whose name is on the title or the mortgage.

When divorcing, the first step is often to reach an agreement on what should happen to the property.

There are three main options:
1. Sell the house and divide the proceeds.
2. Continue co-owning the house (less common and usually temporary).
3. One party buys the other out and becomes the sole owner and mortgage holder.

If one person wishes to stay in the property and take on the mortgage alone, several steps must be taken.

Step 1: Agreeing on the Value and Equity
To begin, the couple must agree on the value of the home and the amount of equity available. This typically involves obtaining a professional valuation. The equity is the difference between the home’s market value and the remaining mortgage balance.
For example, if the home is worth £240,000 and the mortgage is £160,000, the equity is £80,000. If both parties are entitled to an equal share, the person leaving the home may be due £40,000 from the other.

This agreement forms part of the financial settlement and may be negotiated directly or through solicitors or mediators.

Step 2: Transferring the Mortgage
If one person is to remain in the home, they must arrange to take over the mortgage. In Scotland, this usually involves:

• Applying for a remortgage in their sole name, or
• Seeking a transfer of title and mortgage, where the lender agrees to release the other party and assess the remaining partner’s ability to afford the mortgage alone.

This is not automatic. The person keeping the home will need to meet the lender’s affordability checks and credit criteria. If approved, the mortgage can be transferred, and the exiting party’s name removed from both the title deeds and the loan.

If affordability is an issue, other options — such as a guarantor mortgage, longer terms, or additional income sources — may need to be explored.

Step 3: Legal Process and Separation Agreement
In Scotland, a Minute of Agreement (also known as a separation agreement) is commonly used to record the financial terms agreed between divorcing spouses. This is a legally binding document that covers issues like property, mortgage responsibility, pensions, and maintenance.

If court proceedings become necessary (which is less common when agreements are reached amicably), the court can issue a financial order as part of the divorce. Once the mortgage is updated and the Minute of Agreement signed, the legal process to finalise the divorce can continue through the Scottish courts.

Step 4: Land and Buildings Transaction Tax (LBTT)
In Scotland, LBTT may apply when there is a transfer of property. However, if the transfer is part of a divorce settlement formalised in a court order or separation agreement, relief from LBTT is usually available, meaning the transfer may be exempt from tax.

Always check with a solicitor or tax advisor to ensure you qualify for relief and to avoid any unexpected liabilities.

Final Thoughts
Divorcing in Scotland while holding a joint mortgage adds a layer of financial complexity, especially when one party wants to take full ownership of the home. Legal and financial advice is strongly recommended throughout the process to protect your rights and ensure a fair and secure outcome.

This information was correct at the time of publication but is subject to change.