Divorce – A Few Tips to Guarantee Your Mortgage
As Abbotsford mortgage brokers, we decided to write a blog to give you all an easy read of simple options when it comes to financing, whilst going through a Divorce.
The two most binding contracts you’ll ever sign in life are, your marriage certificate and your mortgage contract. Statistics show that 4/10 marriages in Canada end in Divorce. That is equivalent to 70,000 divorces per year.
Anyone who has experienced divorce knows just how emotionally trying it is, keeping track of your finances while staying on top of paperwork can be extremely frustrating and difficult, remember to seek help with your finances when you feel it’s become necessary.
It’s likely you and your spouse will require your own spaces, avoid dragging out minor details, speak with your Abbotsford mortgage broker and position yourself to be financially prepared for your next step.
Dividing assets and spousal buyouts are often the main causes for delays, it’s important to iron out the details of your spousal buyout and whether refinancing your home to do this is an option.
Here are 3 of the most common options people tend to choose.
Option 1: Keep the house and mortgage as is.
Due to finances this ends up being one of the most commonly chosen routes, unfortunately it’s also one of the most undesirable. In this case, both people will leave both of their names on the mortgage as is. The issue with this option is that nothing has technically changed and decisions regarding the home and financial ties will have to be made together. Although one spouse may move out of the home, they will still be as equally tied to it and it will continue to be a shared asset.
Option 2: Sell the House
This is the simplest. Once the home has sold, proceeds and equity will require division amongst each spouse as laid out in your separation agreement. However, if money is owed (i.e. shared debts), you will split the debt according to your separation agreement. Before this option though, you may need to think this one through with your broker, as you may not qualify for a home on your own after selling.
Option 3: Spousal Buyout
In this scenario the spouse wanting to keep the house will have to buy out the others’ equity share, to do this a “new purchase agreement” will be required. In this scenario, the spouse keeping the house will have to qualify for the mortgage on their own. And will need a minimum of 5% equity in order to pay out the spouse who will be removed from title. What’s great about this option is that due to this being a purchase you will qualify for the best rates in the market.