Key Takeaways
• Separation does not separate your home loan. If the loan is in joint names, you are both fully liable for the whole repayment until the loan is refinanced or the property is sold - regardless of what your settlement says.
• Keeping the house usually means a buyout: refinancing the joint loan into your sole name and borrowing enough to pay your ex-partner their agreed share of the equity.
• Lenders assess the new loan on your income alone, but many will count regular child support and certain government payments - and lender policies differ widely, which is exactly where a broker earns their keep.
• In NSW, transferring the property between partners under court orders or a binding financial agreement is generally exempt from stamp duty - a significant saving.
• Talk to a broker before the settlement figure is agreed. There is little point negotiating a buyout the bank will not fund - knowing your borrowing position early shapes the whole negotiation.
As a broker, this conversation is one I have quite regularly: someone is going through a separation or divorce, faced with uncertainty and in the middle of it sits one very practical question – “Can I keep the house?” In my experience, it is rarely just about the money. It is about keeping the kids in their school, staying close to support networks, and holding onto one stable thing while everything else changes. The honest answer is quite often “yes” - but it depends on a handful of things that are worth understanding as early as possible.
Separation from your partner does not separate you from your home loan
Here is the fact that surprises almost everyone. If your home loan is in joint names, separating or even divorcing changes nothing about the loan itself. You are both still fully responsible for the entire repayment, not half each. It does not matter what you have agreed between yourselves, and it does not even matter what the court orders say. The bank is not a party to your settlement, and it will hold both names ‘jointly and severally liable’ until the loan itself is discharged or refinanced.
This is why refinancing sits at the centre of almost every property settlement where one person keeps the home. Until it happens, your ex-partner remains on the hook for a loan on a house they no longer live in - and their ability to borrow for their own next home is strangled by a debt that is no longer really theirs. Both sides have a strong interest in getting this done properly and promptly.
What keeping the house actually looks like
In most settlements, one person keeps the home by buying out the other's share. In practice, that means refinancing the existing joint loan into your sole name, usually borrowing a little more at the same time to pay your ex-partner their agreed share of the equity.
The new loan pays out the old joint loan, your ex-partner receives their settlement amount, the property title transfers into your name, and their liability ends. Done well, it is a clean break for both of you. Done poorly or left to drift, it can become a source of ongoing conflict and financial risk for two people who are trying to move on.
Can you afford it on one income? The real question
This is what the lender cares about, and it is where preparation makes all the difference. The lender will assess the full new loan against your income alone. That sounds daunting, but your income may be broader than you think, because many lenders will count more than just your salary.
Regular child support can often be included, particularly where there is a Child Support Agency assessment or court orders behind it and a clear record of the payments actually arriving. Family Tax Benefit and similar government payments can count with some lenders, depending on the ages of your children. And if you have recently returned to work or increased your hours (- very common after a separation) lenders differ enormously on how quickly they will accept your new income level. Some want a long history others are far more flexible.
This is the part of the process where a broker genuinely earns their keep. These policies vary so much between lenders that a "no" from your own bank means very little. In over 20 years of doing this, I have seen plenty of situations where the difference between keeping the house and selling it came down to simply knowing which lender to ask.
The stamp duty exemption that most people do not know about
Here is a rare piece of good news in a difficult process. In NSW, transferring a property between partners as part of a formal settlement - under court orders or a binding financial agreement - is generally exempt from transfer duty, better known as stamp duty. On a Northern Beaches property, that can be a saving in the tens of thousands of dollars compared with an ordinary transfer.
The key to this is formality. The exemption applies to transfers made under proper legal documentation, which is one more reason to formalise your settlement rather than relying on a handshake agreement. Your solicitor or conveyancer will confirm how it applies to your situation.
Timing - when to act?
Lenders generally want to see the paperwork behind the buyout - usually consent orders or a binding financial agreement - before they will settle a refinance connected to a separation. However there are exceptions to this and you do not necessarily need to wait for a divorce to be finalised. Property settlement is a separate legal process and can happen much earlier but you do need the agreement documented.
My practical advice is to talk to a broker early - ideally before the settlement figure is agreed. Knowing what you can borrow on your own income shapes the negotiation itself. There is little point in agreeing to a buyout figure the bank will not fund, and it is far better to discover your true position while the numbers can still be adjusted. A quick look at a borrowing power calculator can give you a rough starting point, but in a settlement situation, the lender-by-lender detail matters far more than any online estimate.
What if the numbers do not work?
Sometimes a single income will not support the full buyout, and it is far better to know that early than late. There are still options worth exploring; a longer loan term to reduce repayments, an interest-only period while you find your feet, a family guarantor, or negotiating a different split of assets - you take more of the home equity, your ex-partner takes more of the superannuation, for example.
And if keeping the house truly is not viable, knowing that clearly and early lets you plan a sale on your terms rather than under pressure. In my experience, the people who come through this process best are the ones who got the facts on the table soonest - whichever way the decision went.
A word from someone who does this regularly
I work with separating clients regularly, and it is some of the most worthwhile work I do. It takes more care than a standard refinance - coordinating with your solicitor, timing the loan around the orders, and choosing a lender whose policy actually fits your income situation. If you are somewhere in this process and want to understand your options, book a free, confidential chat. No obligation - just clarity about what is possible, so you can make your decisions from solid ground.
FAQ Section
Do I need to wait until my divorce is final to refinance?
No. Property settlement is a separate legal process from divorce and can be finalised much earlier. What lenders generally want to see is the formal agreement behind the buyout - usually consent orders or a binding financial agreement - before the refinance settles. Talk to a broker as early as possible; your borrowing position should inform the settlement negotiation, not follow it.
Does child support count as income for a home loan?
Often, yes - but policies vary significantly between lenders. Most want to see formal documentation such as a Child Support Agency assessment or court orders, evidence the payments are actually being received, and some consider the ages of your children. This variation between lenders is exactly why a broker is valuable in a settlement situation.
Will I pay stamp duty when the house is transferred to me?
Generally no. In NSW, transfers between partners under court orders or a binding financial agreement following a relationship breakdown are generally exempt from transfer duty. The exemption relies on the settlement being properly documented, so confirm the details with your solicitor or conveyancer.
Can I just take my ex-partner's name off the loan?
Simple answer – no you cannot. The lender must be satisfied the remaining borrower can service the entire loan alone, so a new application must be submitted to refinance or replace the existing loan.
