If you’re currently going through a separation, or are considering it, you may want to consider your mortgage options as well. I have mortgage products designed for buying out your ex-spouse. Talking to your mortgage broker early on can help alleviate some of the stress during this difficult time so that you know what options are available to you.
Often times, when you’ve lived in the home long enough, you can save up a substantial amount of equity. In the case of separation, can actually purchase the home from your ex-spouse, or vice versa depending on your agreements. This will allow you to secure a new mortgage on your home for up to 95% of its value to buy-out your ex-spouse.
We now know that in case of separation, you can buy your spouses share of the home with a new mortgage on the home, but are the conditions?
Both parties must be on the mortgage prior to separation. You will need a separation agreement in place in order to use qualify for this product. The separation agreement should outline any joint debt that needs to be settled, and how much your ex-spouse is owed in terms of equity, as well as any assets they may be owed. The separation agreement will support how much money from the home is needed in order to payout the debt and equity owed.
Yes, you can choose the refinance option as well, but you are then limited to a maximum of 80% of your homes value, but you will not be required to pay mortgage insurance fees.
Important Notes about Spousal Buy-Out
- The only exception that allows you to re-borrow up to a maximum of 95% of your homes value, or enough to payout your spouses share in equity (lowest of the two).
- When you borrow between 80% to 95% of the homes value, you are subject to paying mortgage insurance premiums.
- It can be used to pay-off any joint debt that you may have.
- You are required to have an appraisal completed on the home to determine the value of the home.
- It cannot be used to pay for any renovations or debt that is owed solely in your name.
- You do not have to be common-law or married to be eligible for spousal buy-out. However, you would need insurer exception as there won’t be a separation agreement.
If you have any questions about this product, or any other product, give me a call, send me a text, or shoot me an email.