Who Pays the Mortgage and Household Expenses After Separation?

Liability to the lender

Contractual liability to the lender is governed by the loan documents and general contract and property law. Separation, a private allocation of payments, consent orders under the Family Law Act and a Binding Financial Agreement do not, of themselves, release a borrower or guarantor. Release ordinarily requires refinance, discharge on sale, substitution of borrowers or a negotiated release with the lender. Joint borrowers can each be pursued for the full debt on the terms of the loan and joint credit files can be affected by arrears.

The property framework (s 79 / s 90SM)

Property adjustment as between the parties is dealt with under section 79 for married parties and section 90SM for de facto parties. From 10 June 2025 the framework requires the Court to identify the parties' existing legal and equitable rights, interests and liabilities in the property; to consider their contributions (financial, non-financial, and to the welfare of the family, including as homemaker or parent); to consider each party's current and future circumstances; and to be satisfied that any order made is just and equitable in all the circumstances.

Mortgage and household costs

There is no universal rule about how mortgage principal, interest, council rates, building or landlord insurance, owners corporation levies, land tax, utilities, ordinary repairs or capital improvements are allocated after separation. Their treatment depends on:

• title, security and loan terms;
• who is in occupation and on what basis;
• the source and purpose of the funds used;
• care of children and competing housing costs;
• whether the payment preserved or increased value; and
• the whole statutory assessment.

A payment made after separation may be relevant as a contribution, as part of the parties' current or future circumstances, or as part of the just-and-equitable overall check — but it is not converted, by any automatic rule, into a dollar-for-dollar credit, an ownership change or a fixed adjustment.

Occupation and occupation rent

A party who leaves the home does not surrender ownership or lender liability. Occupation rent is not a routine debt and is not presumed. Whether it is allowed, offset against mortgage or outgoings paid by the occupier, or dealt with as part of the broader assessment depends on the facts, including any exclusion, safety, the position of any children, and the parties' respective financial and housing positions.

Interim arrangements, refinance and sale

Interim agreements or orders can address occupation, payment of the mortgage and outgoings, preservation of value, disclosure and access to funds. Lender hardship programs may be available in appropriate circumstances. Refinance depends on the lender's serviceability, deposit or equity, valuation and credit assessment and on a formal release of the departing borrower. Sale before final orders may be appropriate where neither party can service the loan, refinance is unavailable, arrears are increasing or liquidity is required, with net proceeds usually held in a controlled account pending final orders. None of these options is universally required or better; the appropriate course depends on the case, and mortgagee-enforcement outcomes are not predicted here.

Redraw, offset and s 106B

Movements in redraw and offset facilities after separation must be disclosed. Depending on the evidence, they may be treated as ordinary spending, as a premature distribution of pool assets or, where the statutory conditions are met, as a transaction dealt with under section 106B of the Family Law Act 1975 (Cth). Characterisation is fact-specific and depends on disclosure and tracing.

Child support, maintenance and property

Child support under the Child Support (Assessment) Act 1989 (Cth), spousal maintenance under section 72 (or de facto maintenance under section 90SF) and property orders under section 79 or section 90SM are distinct regimes with different tests and time limits. Paying the mortgage does not, of itself, discharge an assessed child-support liability or a maintenance entitlement unless orders or an agreement provide for that treatment.

Third parties, entities and safety

Co-ownership with others, guarantors, family or business lenders, companies and trusts each raise separate questions — third-party rights are considered under the Act and general law, and orders that affect a third party require the appropriate procedure. Family violence, exclusive occupation, urgent enforcement, safety of children, tax and duty consequences and evidence preservation all warrant tailored advice.

When to obtain advice

Obtain advice before any irreversible step. Time limits are strict: married applications must ordinarily be filed within 12 months of the divorce order taking effect (section 44(3)); leave under section 44(4). De facto applications must ordinarily be filed within 2 years of the end of the relationship (section 44(5)); leave under section 44(6). For related topics see our guide to property settlements in Australia.

Frequently Asked Questions

How Parke Lawyers Can Help

Parke Lawyers acts for spouses, co-owners, guarantors and other affected parties on mortgage and household-expense arrangements after separation, on refinancing and sale, and on the drafting of Binding Financial Agreements, through our Family Law and Property & Conveyancing teams. Engage us early so liability, interim payment arrangements, refinancing or sale options, and the effect on property settlement can be assessed.