Learn what comes next with your home
Whether going through a divorce or ending a common-law relationship, separation is never easy, especially when most individuals feel they have no choice but to sell their home and split the equity. Fortunately, there is another way. The Spousal Buy-Out Program is supported by all three of Canada's mortgage insurance providers (Canada Mortgage and Housing Corporation, Genworth Financial and Canada Guaranty). The insurers designed it to allow one party to refinance the shared home, up to 95 percent of its appraised value!
With your needs in mind, this program will not only allow you to bring on a cosigner to assist with the buyout, but a spouse can also use it to pay additional debts noted in the separation agreement. However, it is essential to note that you and your ex-partner must both currently be on the property's land title to qualify.
If you are separating from your spouse or partner and would like to hold onto your shared home, there are a few things you will need:
An appraisal may have been obtained with the Equalization of Assets. However, some lenders require this to be done by a separate appraisal company. It must also have been produced within 90 days (less with some lenders) to ensure accuracy.
A Signed Separation Agreement
The lender must be provided with a signed copy of the separation agreement, which outlines the allocation of assets.
An Agreement of Purchase and Sale
The lender will require a standard agreement of sale indicating the new ownership (your real estate lawyer can help with this).
An Employment Letter or Recent Pay Stub
A lender may ask for both- this is required to verify your ability to manage your mortgage payments.
Debt Payout List
A debt payout list is a one-time optional feature that allows you to buy out the other owner's share of equity and/or pay off joint debt, as explicitly noted in the separation agreement.
If you are going through a separation, contact us for questions or more information.