When a relationship ends and one of you wants to stay in the house, the conversation quickly turns to the mortgage. Usually the plan is simple on paper: one person keeps the property, pays the other out, and the loan moves into one name. In practice it is a refinance, and the lender assesses you as if you were applying for the first time, on your income alone.

We help people through this regularly, and most of the stress comes from not knowing the order things need to happen in. This is how it usually works.

You can't just take a name off the loan

A lot of people assume the bank can remove one borrower and leave the loan as it is. It can't, or at least not without assessing the person who is staying. The existing loan was approved on two incomes, and the lender needs to be satisfied that one income can carry it. If it can, some lenders will do a release of borrower on the existing loan. More often, the cleaner path is a new loan, sometimes with a different lender, that pays out the old one and the ex-partner's share at the same time.

How the buyout amount is worked out

The amount you need to borrow is roughly the current loan plus whatever you have agreed to pay your former partner for their share, plus costs. That figure comes out of your property settlement, not from the lender, so the lender will want to see it written down.

A quick example. Say the house is worth $1.6 million, the loan is $700,000 and you have agreed to pay your ex-partner $450,000 for their interest. The new loan would need to be around $1.15 million plus costs, which is about 72% of the value. Whether that works comes down to one thing: can your income support a loan of that size by itself?

The paperwork lenders want

Lenders are cautious with separation refinances because until the property split is formalised, either party could still change their mind. Expect to be asked for some or all of the following:

  • Consent orders from the Federal Circuit and Family Court, or a binding financial agreement, setting out who keeps the property and what is paid to whom.
  • If orders are not finalised yet, some lenders will work from a signed separation agreement or draft orders, with settlement tied to the final documents. Others won't consider it until the orders are made.
  • Income documents for you alone, in the usual form: payslips, or tax returns if you are self-employed.
  • Evidence of any child support or spousal maintenance you receive, or pay.
  • Statements for any debts you are keeping, and confirmation of the joint ones that are being closed.

Our home loan documents checklist covers the standard items. The separation documents sit on top of those.

Where these applications usually get stuck

Serviceability on one income. This is the big one. A house that was comfortable on two salaries can be a stretch on one, especially once lenders add their assessment buffer. Child support and maintenance you receive may help, but lenders treat it differently. Some will count it if it is documented and the children are young enough that it will continue; some discount it heavily. Payments you make go in as an expense.

Joint debts that are still open. A joint credit card or car loan counts against you in full, even if your ex is the one making the repayments. Getting those closed or moved into one name before you apply makes a real difference to the numbers.

Living expenses. Your spending pattern changes after a separation. Lenders will look at recent statements, so have a clear, honest budget for your new household rather than one copied from the old joint account.

A loan above 80% of the value. If the buyout pushes your borrowing past that point, lenders mortgage insurance usually comes in. Our LMI guide explains how that works.

Stamp duty on the transfer

In NSW, transferring your former partner's share to you under family law court orders or a binding financial agreement is generally exempt from transfer duty. The exemption depends on the transfer being made under those documents, which is another reason to get them in place first. Your family lawyer or conveyancer will confirm whether it applies to you.

When one income isn't enough

If the numbers don't stretch, there are a few things worth looking at before deciding the house has to be sold:

  • A longer loan term lowers the repayments and can lift borrowing capacity, at the cost of more interest over time.
  • A family guarantee, where a parent uses equity in their own home as extra security. It helps with deposit and LMI rather than income, so it suits some situations and not others. See our guarantor loan guide.
  • A different lender. Assessment models vary, particularly in how they treat child support, bonuses and self-employed income. A lender that says no is not the whole market.
  • A smaller buyout, or a staged one. That is a negotiation for your lawyers, but it is easier to have once you know what you can actually borrow.

Get the lending answer before the agreement is final

The most useful thing you can do is find out what you can borrow on your own before property settlement is agreed. Too often we see people sign up to pay out a figure, then discover the bank won't lend it. A broker can give you a realistic number early, and you and your lawyer can negotiate knowing where you stand. Our borrowing capacity guide explains what goes into that number.

We are licensed credit advisers in Forestville and help people across the North Shore and Northern Beaches with this. If you are working through a separation and want to know where you stand, get in touch or call 1300 001 755. It's a confidential conversation, and we're happy to work alongside your family lawyer.

Frequently asked questions

Can I take my ex-partner's name off our home loan?

Not without the lender reassessing the loan on your income alone. Some lenders will release a borrower from the existing loan if you can service it by yourself. Many people refinance to a new loan that pays out both the old loan and the former partner's share.

Do I need consent orders before refinancing to buy out my partner?

Most lenders want consent orders or a binding financial agreement before settlement. Some will assess the application earlier using a signed separation agreement or draft orders, with the loan settling once the final documents are in place.

Is there stamp duty when buying out a former partner in NSW?

A transfer between former spouses or de facto partners under family law court orders or a binding financial agreement is generally exempt from transfer duty in NSW. Confirm with your lawyer or conveyancer that the exemption applies to your situation.

Does child support count as income for a home loan?

Some lenders count child support or spousal maintenance you receive if it is documented and expected to continue. Others discount it or exclude it. Child support you pay is treated as an expense.

General information only. It does not take your objectives, financial situation or needs into account, and it is not credit or financial advice. Lender policy, rates and eligibility change regularly and vary between lenders — talk to us about your own circumstances before acting on anything here.