Spousal Buyout Program

With almost 50% of marriages ending up in separation or divorce, it is only prudent to know your options when it comes to keeping your principal residence.

Traditionally, the spouse that is staying in the home must qualify to cover the new mortgage amount.

The maximum amount of equity take out on a first mortgage is 80% of the value of the home, as determined by the Lender’s appraiser. If there is not enough equity to allow this to take place, a relative may assist, or you may sell the home. However, selling can get expensive with real estate fees, bank mortgage penalties, legal fees, and moving expenses — never mind the added stress that this brings, especially if children are involved.

Now, there is a Spousal Buyout Program offered through the CMHC, or Genworth, which provides up to 95% of the value of the home which will fall under the mortgage purchase rules.  This may allow you to keep your home and avoid moving while enabling you to pay your ex-spouse or partner their portion of the home’s equity, and you help maintain some stability in an otherwise turbulent time.

Qualifications for the program include:

• You must be able to afford the mortgage with your sole income, and it cannot be more than 95% of the current value of your home.
• Both you and your ex-spouse or partner must currently be on the deed to the property.
• You will need a legal separation agreement and a purchase agreement prepared by your lawyers.
• All aspects of the new mortgage must be entered correctly on the separation agreement, including equity out for spouse, debts to be paid, and all other costs.
• You cannot borrow more than what the separation agreement states.

In some cases, we may be able to consolidate some debts to help with affordability, but these debts must be disclosed in the separation agreement.

Let The Mortgage Centre specialists show you how!