No one gets married to separate. Sadly, that is what happens to many Canadians. More than 38 percent of marriages in Canada end in divorce. To make matters worse, you often have marital assets and children to think about while you are going through one of the most emotionally trying times of your life.
When you are going through a divorce and want to stay in your home, you have the option of buying out the other party. However, if you cannot do that, you face a difficult decision to sell your home.
Some people are okay with selling the marital home and moving on with their life in a new house. However, there are some situations when that is not the case, especially when there are kids.
It is difficult enough to go through the divorce of parents, having to move out of your home only makes matters worse. Fortunately, the Spousal Buyout Mortgage is an excellent option for people in these situations. If you are facing a divorce, keep reading to find out why this might be the solution to moving on.
What is a Spousal Buyout Mortgage?
A Spousal Buyout Mortgages Loan allows you to refinance your house at up to 95 percent of the current market value. You are then able to use the money to pay your current partner for the equity in the home you will owe them. Furthermore, it also allows you to remove them from the mortgage and to protect your interest in the principal residence in the future.
Qualifications for Spousal Buyout Mortgages
The criteria are relatively straightforward. However, there are some things you will need to receive loan approval. The items required are below:
- You have to have enough income to qualify for the loan on your own.
- The mortgage amount can not be more than 95 percent of the home value.
- You have to have a separation agreement.
- You need a purchase agreement between the two parties.
- You cannot borrow more money than is necessary to satisfy the separation agreement.
- Both parties on the separation agreement must be on the current title to the home.
- An appraisal of the home must be completed.
How Can You Use the Loan?
Spousal Buyout Mortgages are meant to give one party the ability to keep the family’s primary residence. However, in addition to paying the ex-spouse their share of the equity, you might be able to pay off some other debts the two of you share.
However, any debts that are paid with this loan type must be included in the separation agreement. Additionally, you need to make sure these debts are equal to or less than the allowable loan amount.
How is This Loan Different from Others?
Typically, when you want to pay off debts using the equity in your home, you have to take out a Home Equity Line of Credit (HELOC). These loans differ from Spousal Buyout Mortgages because they only allow you the option of taking out up to 80 percent of the value of your home. Additionally, it is often more challenging to qualify for a HELOC.
If you are facing a divorce, one of the best things you can do is stay calm and try to live as healthy a life as possible. Keeping your home might be the best way to do that. So, it is worth looking into the Spousal Buyout Mortgages Program. You can talk to a mortgage company or your divorce attorney for more information. Doing so will help you make the best decision for you and your family during this difficult time.