Divorce, Spousal Separation, or Relationship Dissolution
Mr. and Mrs. Smith met by chance on a business trip in South America and in the months that followed, a passionate love affair blossomed. They ended up getting married in a beautiful ceremony with all their closest friends and loved ones. As time went on, they found however that their passion fizzled out and that perhaps they didn’t know everything about each other. Next thing they knew, their marriage was in such a bad place that there was no home left and they were on the verge of divorce.
Now – more than likely, you and your spouse aren’t professional assassins like Brad Pitt and Angelina Jolie, and don’t need to worry about things like your house being blown up. But you may have reached the point where you feel like your only solution to move forward is to separate or divorce. You may have a child or children involved that you and your ex-spouse would love to be able to keep in their home after the divorce, at least part of the time, to minimize the impact on them. Or you may have a large amount of equity, RRSP’s, other investments, etc, requiring one spouse to pay the other a fairly significant equalization payment and the only way to do this is to access the full amount of equity in the home or sell.
While we all know that nobody sets out looking to get divorced, unfortunately we know that some people do reach this point. If any of the situation above sounds anything like yours (hopefully minus the Hollywood theatrics), don’t despair, as there are options available to you to keep that matrimonial home, other than hiring a team of trained killers.
This same idea also applies to situation of common-law spouses, siblings who purchased a house together but one of them no longer wants to own the home, parents who want off of their children’s homes, etc.
In situations where two parties are on title of the owner occupied home and in the process of a legal separation where one party will continue to live in the existing property, the following guidelines will now apply:
- Applications may be submitted as a purchase loan up to 95% LTV of $500,000 and an additional 10% on the value over $500,000.
- The following criteria will apply:
- Both parties must be on title to the property prior to the legal separation
- The following documents confirming the sale price and transfer of title must be on file:
- Finalized separation agreement
- Offer to purchase
- Since this purchase transaction is non-arms length, a full appraisal will be required to confirm the value. The maximum lending amount would be based on the lesser of the purchase price or the appraised value.
- If no new funds are needed for the buyout, and the existing mortgage previously had default insurance, then in certain situations no insurance premiums would apply
The significance of this program is that it allows you to pull equity out of your home up to a maximum of 95% loan-to-value to assist you in settling your divorce or separation, whereas in regular refinance situations you can only go up to 80% loan-to-value. It allows one spouse to stay in the home after the divorce while leaving them in a strong mortgage position.
To start the process of a divorce or spousal separation mortgage, you can apply online now here, or give us a call to discuss how exactly the process works.