Will sister need to leave family home?

[ChristobelW]

My sister called me today in a bit of a tizz. She and her husband divorced two years ago. They have two kids (ages 17 and 13). Husband left the family home when they divorced in 2020, and is renting nearby. They agreed that my sister and the kids would continue living in the family home, and that she would pay the mortgage. Her husband was the only person named on the mortgage when they bought the property 16 years ago, so technically the property is still in his name (though I think she pays the mortgage lender directly from her own account each month). Basically, she has fallen behind on the mortgage. She has not paid it for three months and thinks she may struggle to keep up with payments in the coming months. Her finances have been hit by a reduction in her working hours. Her husband is sympathetic to be fair to him. But he is on a low wage himself and simply cannot afford to pay the mortgage for her. He is obviously concerned about getting a bad credit rating, so he is saying that the property will need to be sold if my sister cannot afford the monthly payments going forward. I know nothing about divorce, but I would assume that he is right? My sis is obviously upset, because she does not want to leave the family home after 16 years, but she fears she has no choice. Are there any other realistic options?

Well, if no one can afford the mortgage I don't think there is, unless the bank is willing to re-finance/extend the terms/shift to interest only but I'm not sure that's likely at all at the moment.

If she doesn't pay the mortgage then the bank will repossess it, which means it will be sold anyway.

She (actually both of them) need to contact the bank and see if they can offer a reduced rate for a limited time until your sister sells the house.

As a short term measure, I think it would be much better for her to contact the bank and try to work something out (possibly going interest only, extending term etc.) to get monthly payments down than burying her head in the sand and just not paying. A major concern would be that not paying could wreck her and her ex's credit rating and make it very difficult to get a mortgage in future. So by staying when she can't really afford the mortgage she could be jeopardising her chances of owning in future.

If your sister and her ex entered into a consent order on divorce this should set out the basis on which she is entitled to stay in the house e.g. until the children are 18 and state who is responsible for paying the mortgage so it would be worth checking what any such order says and go from there.

No one (the bank or her ex) is likely to be able to force her out instantly but she's not going to be able to stay indefinitely if she can't afford the mortgage.