How does refinancing work after a separation?

First the property settlement is agreed: consent orders through the Family Court or a binding financial agreement signed by both parties with independent legal advice. That document sets out who keeps the home and what is paid to the other party. Then the refinance is applied for in the keeping party's sole name, for the existing loan balance plus the payout amount. At settlement the old joint loan is discharged, the former partner is paid, and the title is transferred to the sole owner. Lenders will not release the departing party from the joint loan without a full refinance.

This is where most separation refinances get hard. A loan that two incomes serviced comfortably may not fit one income plus a payout. Lenders count child support received as income if it is court ordered or through a formal agreement and has a reasonable period to run; child support paid is an expense. Single parent pensions and Family Tax Benefit are counted by many lenders. If the numbers do not work at 30 years, some lenders will assess on a longer term or interest only period to get across the line, and a family guarantee can cover a shortfall in equity.

Transfers of property between separating spouses or de facto partners made under a Family Court order or a binding financial agreement are exempt from transfer duty in every Australian state and territory. Without the order or agreement, the transfer is treated as a normal sale and duty is payable on the share transferred. Capital gains tax rollover relief also applies to transfers under those documents, so the receiving party inherits the original cost base rather than triggering a taxable event. Get the paperwork done before the refinance, not after.

When the payout cannot be funded, the alternatives are selling and splitting the proceeds, one party staying on the loan while the other is released (which lenders rarely allow), or a deferred settlement where the sale happens at a set date. A specialist can test the borrowing capacity early so both parties know whether keeping the home is realistic before legal fees are spent negotiating it.