The very phrase “family home” conjures up images of happy family life Martha Stewart-style. It has connotations of home baking and cosy evenings in front of the fire with children happily playing Scrabble.

Unfortunately, when marriages break down the family home becomes the single most divisive issue, after access to the children, which the couple must negotiate.

In the years before the bursting of the Celtic Tiger bubble, legal practitioners could more often than not settle cases whereby one party would buy out the other's interest in the home, and everybody would move forward to a happy future in separate accommodation.

The crash came and unfortunately everything stopped. In many cases couples were forced to remain in unhappy marriages because there was either little equity, or even negative equity, attached to the family home.

Since the recovery in house prices, family law practitioners have been able to again come up with solutions for separating couples when it comes to disposition of the couple’s home. A complicating factor is the issue of tracker mortgages and, in some cases, tracker mortgages that are interest-only for the life of the mortgage.

The tracker mortgage is effectively a new type of asset, ie the value of the reduced interest payable over the life of the mortgage which one half of a couple gets to retain. In some circumstances it can become almost the most valuable asset of the marriage, when there is very little equity in the property. In a recent case where the family home mortgage was approximately €350,000 the actual value of the tracker element of the mortgage has been calculated at €60,000 over the term of the mortgage, which is a sizeable sum in a relatively modestly priced home.

New solution

Where there is an interest-only loan for the life of the mortgage tracker, this can offer an entirely new solution to the courts in making provision for spouses and their children.

In some cases, the charged property can be rented out for sufficient rental income to enable both parties to discharge the cost of cheaper rental accommodation.

Many of these mortgages were for a 30-year term. So if they were drawn down in 2005, this would allow a couple to generate an income from a property whilst still servicing the mortgage up to 2035.

It also offers the capacity to house one of the spouses and the children at a minimal cost, considerably less than would be needed to discharge a market rent in a similar, or even much less attractive property.

Legal practitioners must think outside the box and not simply advise that the co-owned family home should be sold.

The courts are loathe to order the disposal of properties where the sale will result in the couple losing the benefit of the tracker mortgage. A solution that finds a positive reception in the Family Courts is where one party continues to reside in the property that is subject to a tracker mortgage and puts the house to work for the family.

For example, where the property is located in an area attractive to students, the spouse retaining right of residence in the house would take in students, therefore reducing the maintenance obligation to the person who moves out.

This solution allows an additional strand of income which assists in the costs of providing for children who are attending school or college.

What are the obstacles for maintaining the family home and not selling it? Banks and other mortgage providers won’t cooperate in helping people to refinance after separation. When both the husband and the wife are secured on the property mortgage, even where one of these parties does not work outside of the home, the banks will absolutely refuse to release the other party from the security of the mortgage.

Borrowing power

This effectively renders it impossible for a spouse leaving the family home to rehouse themselves, because all of their borrowing power is tied up in the mortgage of the family home. Some method of finding recompense must therefore be found in order to prevent an inequity arising. This can of course be arrived at by allowing transfer of other assets, or merely significantly reducing the burden of maintenance on that individual, allowing he or she to discharge the cost of rent pending the ultimate sale of the house and division of the proceeds between the parties.

In a separation situation, the primary aim of lawyers and the courts is to sever the nexus between the parties, as when the relationship ends it is important to reduce the obligation to cooperate in the future on financial issues.

It is our aim as lawyers to achieve this as soon as possible, in order to allow people to move on with their lives. However, continued joint ownership of the property does not allow individuals to do this.

It is for this reason that consideration should be given by the Government to introducing legislation that obliges mortgage providers to release people from mortgage security, without tampering with the original attractive terms.

The banks have been bailed out by the taxpayers and it is time that taxpayers, and in particular those heavily burdened separating taxpayers, get some relief in return.

The home is for most people their sanctuary from the world and we must be cognisant of the fact that everybody needs one, including separated families where both parents must be able to provide accommodation to allow the children move happily between their parents. It is our job as lawyers to ensure that one parent is not further marginalised by virtue of being forced to reside in wholly unsuitable accommodation, which the children will not want to visit.

Ann O’Neill is a solicitor specialising in family law. See aonfamilylaw.com

She will be interviewed by Kathy Sheridan at The Irish Times Home & Design Theatre at the ptsb Ideal Home Show next weekend.