When it comes to divorce, you are not alone! People get married with the best intentions, a happy future, white-picket-fence, beautiful children, companionship and a dream home. Unfortunately, things sometimes don’t always go as planned.
In Canada, there is an average of 70,000 divorces and separations each year. The vast majority of divorces happen in January. Couples tend to wait until January due to the scarcity of court time through Thanksgiving and New Years.
Know of a close friend or family member that is going through a divorce? Let them know that there are many easy options available and we can help.
Sell the House off, Split the Proceeds from the Sale or Split the Shortage
Most often this is a solution to sell off the property and remove both names from the title and the mortgage, this may not be the best solution if there is a large penalty on the mortgage or little/no equity in the home. When considering selling, also consider other costs such as lawyer’s fees, realtor’s commissions, and penalties to discharge the existing mortgage.
One Spouse Stays and the Other Transfers their Title
This is one of the best alternatives to selling the property as there are no commissions to be paid to sell and no penalties to be paid to the bank. Not all mortgages have this option, however once there is a separation or divorce agreement and as long as the spouse who wishes to stay qualifies on their own or with a new co-borrower, this process can be the path of least resistance.
One Spouse Stays and Refinances to Buy Out the Other
You both have accumulated a large amount of equity together in the home, therefore walking away may not be an option but maybe it is important to keep the house for your kid’s sake etc. As long as one spouse or together with a new co-borrower qualifies can refinance the existing mortgage to take out equity and remove the other spouse from the title and the mortgage. Penalties may apply to discharge the mortgage if they do apply.
Qualifying for a Home Post Divorce
To qualify to purchase a home after a divorce or separation, our lenders will extend mortgage financing, however, a divorce or separation agreement in advance is usually preferred and receiving Child or Spousal support can help increase the amount you may qualify for.
If you know of a friend or family member that is in the middle of a divorce or legal separation, let them know that there are many options available and we can help save them thousands.
