Separation and Mortgages
Question: When should you consult a Mortgage Professional?
Answer: Before you sign a separation agreement!
Separating can be emotional and overwhelming. Mortgages can be confusing. Throw in a few kids and many end up completely lost and end up making financial decisions without fully understanding their options or their impact.
Food for thought before you finalize your separation agreement….
I want to sell our joint home and purchase a home on my own
Buying and selling comes with costs: land transfer tax, legal fees, real estate fees. Understanding the costs and the funds you will end up with after a sale to put towards a new home is super important. You also need to know if you will qualify for your new mortgage if you need one. Are you paying support? Are you receiving support? How does this impact your ability to borrow money?
I want to stay in our current home and buy my spouse out
Did you know that refinancing your home is limited to 80% of your home value? For example, if your home is worth $800,000 – you can refinance your mortgage to a maximum of $640,000.
Fortunately the 3 default insurance companies in Canada (Sagen, CMHC and Canada Guaranty) all have Spousal Buyout Programs.
How do they work? The spousal buyout program allows you to refinance up to 95% of the home value. So using our $800,000 home, you can now borrow up to $745,000 to pay out an existing mortgage and buy out your spouse’s portion of the home.
** You may also be able to pay out joint debt and keep extra funds back for yourself if there is enough equity in the home.
Understanding your options when it comes to your home can be one less worry during the separation process. The Spousal Buyout Program differs slightly with each insurer so best to talk to a Mortgage Professional (like myself) who is familiar with the differences as this can impact what can be included in the mortgage amount.
For a no cost, no obligation strategy session call me!