Left holding the mortgage

Thousands of people who break free from loveless marriages can still find themselves trapped: in a loveless mortgage.

Either the bank will not release one party from the mortgage or it won't let the other party move it to their name only. The upshot is that both partners are stuck with a joint agreement they no longer wish to honour. It is one that prevents them, in a very real way, from moving on. Only now are lenders starting to provide solutions to a problem that affects more people every year.

The first to address this was mortgage broker Charcol. It has linked up with Bank of Scotland to offer a 'divorcee mortgage', geared towards women reliant on their partner's income. Kim North, a financial adviser with London-based firm The Pretty Technical Partnership, describes it as 'evolutionary'.

There are two key advances here. First, maintenance is treated like an ordinary salary. Most banks refuse to do this, believing payments from an 'ex' are less reliable than money from an employer.

The second advance is that only a solicitor's letter is required to confirm maintenance. Most banks will accept only a court order, but obtaining such a document can be a long, expensive and arduous process. Charcol spokesperson Ray Boulger says there is now recognition that divorce 'is a difficult time and it need not be made any more difficult when it comes to arranging mortgage finance'.

But why are financial institutions suddenly getting all caring and sharing? Ruth Whitehead, an independent financial adviser who works exclusively with women, is cynical. 'It's a marketing ploy. There are a lot of divorcées out there, and they are just tapping into a niche market.'

Britain has the highest rate of marriage failure in Europe. Figures from the office for national statistics reveal there are around 114,500 divorces a year. Of the women involved, most will suffer a 28% drop in income, according to the economic and social research group.

This highlights the fact that, even in the twenty-first century, many women are still financially reliant on their partner. 'It continues to be the case that the wife stays at home to look after the house and raise the children while the husband goes out to earn the money', says Vivienne Starkey, a financial adviser with Equal Partners. 'And when that relationship ends, she can be left stranded.'

This is not an easy posi tion to bounce back from. North of The Pretty Technical Partnership says it is difficult for women with little financial knowledge and even less financial independence to grapple with the complicated ins and outs of a mortgage. 'Things have become clearer in recent years, but getting to grips with everything remains difficult, especially when you are doing it all from scratch at a time of great emotional upheaval.'

Men suffer too. Mark Kennan, from the information service Divorce-online, knows of many men who have found themselves ensnared in the mortgage trap.

James Tower is one of them. James and his former wife Denise (not their real names), agreed that she would stay with their three young children in the family home - a three-bedroom bungalow in Kingston with an £88,000 mortgage.

The plan was for Denise to take this on in her own name, meeting the repayments out of her maintenance. But their building society would not accept this. Personally, Denise earns around £6,000 a year as a part-time radiographer. In addition she receives £105 Working Families Tax Credit and £35 a week child benefit, boosting her monthly income to around £1,600. But the building society would not accept this either, as government entitlements are not counted as income.

Moving to a self-certification mortgage was another option. Denise would simply sign a declaration of her earnings and the lender would take her word for it. No further questions asked. But she would have to pay a higher rate of interest, plus thousands of pounds in redemption penalties to the original lender.

To Kennan this is an all too familiar Catch-22 situation. 'If you move you get fined; if you stay put you remain financially entangled with your estranged spouse, who is then not able to take out a mortgage in his or her own right.' It is for this reason that he welcomes new products like Charcol's.

Its 'divorcee mortgage' is divided into two schemes. One offers a straightforward mortgage up to 80% of a property's value. Borrowers can opt for either a discounted rate - 1% off the standard variable rate, or a tracker rate - bank base rate plus 1%.

The other scheme offers more flexibility to those with larger deposits. It is available for up to 75% of the property's value. It allows payment holidays as well as over- and under-payments. There is not, however, a choice of rates - just the tracker rate of base rate plus 1%.

Industry experts expect that where Charcol has led, more will follow. But in the meantime, many people continue to be trapped in ways they never expected.

'It's not even in my own name'

For Suzanne Evans, getting divorced also meant finding a new mortgage and a new home. 'It was hell,' says the Surrey-based 36-year-old. The process started six years ago, when her daughter was five.

'At the time I was completely financially dependent on my husband, as many women with children are. He was the one with the money and he was the one who knew about money. So he got to make all the decisions.'

Suzanne had to settle for a mortgage that is part repayment and part endowment, based on her former husband's pension. 'Worst of all, it is not even in my own name.'

With hindsight Suzanne says she should have found herself some independent financial advice. 'But my main concern then was not getting a mortgage, but just getting out.'

Having heard about new divorc?e mortgages, Suzanne plans to investigate switching.

'I've just been very lucky'

Margaret O'Sullivan wouldn't have found a mortgage after her divorce if she hadn't had a stroke of good fortune.

It was 1989; her son was a teenager and her daughter was just a baby. There was no maintenance money from her former husband. Margaret and her children had to rent a two-bedroom bungalow in Rhyl, North Wales.

When, several years later, the property came on to the market, Margaret had the option to buy it. By then both she and her son were working.

They wanted to go halves on the mortgage. But their combined income was not enough. Then their landlord knocked two years' worth of rent off the asking price.

At that point Margaret asked her colleagues, who just happened to be mortgage brokers, if they could find a lender.

'I don't know how they did it, but they found someone. A few strings must have been pulled.

'All this would not have been possible without luck and I have been very, very lucky.'