A Spousal Buyout is a mortgage arrangement following a Divorce/Separation Agreement. This mortgage arrangement allows one spouse to remain on the title to the property while the other ex-spouse is released from the mortgage. Most lenders will allow borrowers to buy out the ex-spouse using the equity in the property up to 80% Loan-To-Value (LTV).
Going through a relationship breakup is hard enough, but trying to find the best mortgage solution on top of that can be difficult. Work with professionals who emphasize client-relationship confidentiality.
There are a few things that borrowers would want to know more about this mortgage solution. Contact your local mortgage broker or book a free consultation with one of ours for more details.
Borrowers can qualify for this mortgage solution by providing a copy of the Separation Agreement with their mortgage application.
Bruised Credit Not A Problem
Borrowers with bruised credit can qualify for a Spousal Buyout mortgage. There are conventional and alternative lenders who will work with the borrower's financial situation.
Current Property Value
Lenders will evaluate the available equity based on the current property value that has been appraised by a licensed Appraiser chosen by the lender.
At Richmond Hill Mortgage Broker, we work with lenders who are reputable and have established outstanding levels of customer service, integrity, and compliance with regulatory authorities.
What To Know About
Spousal Buyout in Richmond Hill
When considering a spousal buyout of a marital home, it's crucial to get a licensed appraiser to identify its current market value. In a divorce, the family home is often the couple's most significant asset. Therefore, dividing the assets can be an emotional turmoil for both sides. Using licensed professionals to handle the entire procedure helps to avoid personal emotions from getting in the way of a fair process and ensures amicable separation between the couple.
Spousal Buyouts Can Be a Solution to a Divorce or Separation
Spousal buyouts can be a winning solution for dividing shared assets if your relationship ends. A spousal buyout will allow one of the spouses to keep the marital home after the separation/divorce while the partner receives financial entitlement. The main prerequisite for spousal buyouts is the completion of a Separation Agreement. It should be drafted by two lawyers, preferably two separately and one representing each spouse. Some lenders will not recognize a separation agreement drafted by a mediator, so seek legal advice for a buyout.
A divorce can be stressful, and a spousal buyout can offer an excellent solution for one spouse to stay in the same house while the divorce continues. Also, a buyout can benefit the child(ren) as they can live with one of the parents in the same place despite the separation arrangement between their parents.
However, there are a few drawbacks to spousal buyouts.
Another major drawback of spousal buyouts is that the spouse who stays in the marital home will have to qualify for the mortgage on their financial income instead of a combined household income. Please speak with a mortgage broker before proceeding with the Spousal Buyout process to ensure that you can qualify for the debt burden and that it is affordable.
Qualifying on a single income may be fine to most people because, typically, the new mortgage amount after the spousal buyout is not more than half of the available equity in the property to ensure an equal share between the couple.
Another drawback for consideration is the remaining spouse will be responsible 100% for all repairs and upkeep of the marital home after the Spousal Buyout process completes. This type of household expense is no longer shared between the couple.
FAQ on Spousal Buyout
How a Spousal Buyout Works in a Divorce?
When you and your partner decide to get a divorce, the decision about what to do with your shared home can be tricky. One option is to sell your shared property. However, this can be an expensive and stressful process.
Another option is a Spousal Buyout, which is to buy out your spouse's interest in the home. This option can make the split simpler and cleaner.
Suppose you decide to go through with a Spousal Buyout process. In that case, it may be a good idea to first speak with a licensed mortgage broker and find a licensed appraiser appointed by a lender to get a professional home valuation.
A real estate appraiser can help you determine the value of your home. It can also help you calculate how much you owe your ex-spouse.
Once you have a fair idea of the value of your house, you can work with the mortgage broker to find out how much available equity is in the marital home and work with a family lawyer to determine what portion of the equity you owe to your ex-spouse.
Depending on the Separation Agreement prepared by the family lawyer, you will know how much of the equity portion you owe to your ex-spouse. Make sure to review the Separation Agreement with your lawyer representing you to ensure you get your fair share.
Getting divorced can be a complex process fraught with nervous emotions, but a Spousal Buyout can effectively divide your shared assets.
How Much Does it Cost to Buy Your Spouse Out of the House?
If you want to know how much it costs to buy out your ex-spouse, it's a good idea to start searching from a reputable online valuation tool. For example, Realtor.ca and Remax.ca are two frequently visited sites that estimate your home's value. The calculator on their websites uses public data to help you decide.
In addition to using an online valuation tool, it's also a good idea to research the local market. For example, a real estate agent in Richmond Hill can provide you with recent sales in the area and your neighbourhood. While there is a fee for this service, it's worth it. And you can use the information to get a second opinion about the market value of your house.
Generally, when you work with a local real estate agent, this person will have to consider your local neighbourhood's average sales prices and recent appraisals. Therefore, providing you with a close estimate of your property value.
After knowing how much your house is worth in the market, you can continue with the next step to determine how much it cost to buy your spouse out of the house. Most likely, you will have to refinance your original mortgage. Usually, the new loan is large enough to cover your spouse's portion of the mortgage plus any outstanding equity from your previous loan.
If you need a reliable source of information, you can ask your attorney. They should be able to suggest a trustworthy mortgage broker who serves homeowners in your neighbourhood looking for a Spousal Buyout mortgage.
Justin W, Richmond Hill
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I'm a self-employed cab driver. I was devastated when my bank, with whom I've been banking with for years turned me down for a mortgage. My business is mainly cash, and I didn't meet the bank's criteria for proving my income. I found Matrix Mortgage Global online and decided to give them a call. I was surprised that I got approved. I thought that if my bank turned me down everyone would. Thanks!
Andrea C, Markham
I had 2 yrs left on my consumer proposal, with the 2nd mortgage offer by Matrix Mortgage Global I was able to pay off the proposal and re-establish my credit
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