Spousal Buyout Program: Your Path to Independence After Divorce
Navigating a divorce is never easy and often brings significant challenges, especially when dividing assets. Housing, in particular, can be a complex issue. You may face three primary options: selling your home and splitting the equity, paying out your spouse if you have the necessary funds, or choosing our Spousal Buyout Program. We understand that divorces don't have fairy tale endings, so we're here to help make this process less stressful for you.
The Spousal Buyout Program
A Spousal Buyout Program is designed to empower you to keep the home you're currently in while ensuring your family's comfort and security during the challenging transition of separation. This program offers a lifeline for those looking to maintain their independence and protect their family's stability.
How Does a Spousal Buyout Work?
The program can assist you in buying out your spouse's share of the home and allow you to settle other debts outside of the separation. If you're undergoing a legal separation, we can offer you a new mortgage or loan in your name, covering up to 95% of your home's value. This means you'll become solely responsible for the mortgage, removing your ex-spouse from the deed and the mortgage.
Moreover, the Spousal Buyout program allows you to bring on a co-signer should you find it challenging to manage the mortgage with your sole income. This co-signer can be a family member or a new partner. Rest assured, our program is backed by all three of Canada's mortgage insurance providers: Canada Mortgage and Housing Corporation (CMHC), Sagen, and Canada Guaranty.
How Much Does It Cost to Buy Out a Spouse?
The cost of buying out your spouse depends on your home's current value and the remaining balance on your existing mortgage loan. Through the Spousal Buyout Program, you'll secure a new mortgage for the portion of the house that remains unpaid, as well as the equity your spouse has in the home.
For example, if your home is valued at $350,000, and you have an outstanding mortgage balance of $100,000, the equity you and your spouse share is $250,000. To buy out your spouse's half of the equity, you would need $125,000 (in this case). However, you can arrange a different payout amount based on your separation agreement.
In this scenario, the new mortgage in your name, along with any co-signers, would amount to
$225,000 (mortgage balance plus spousal buyout). If your separation agreement includes other debts to be paid to your spouse, the Spousal Buyout Mortgage can also be used to settle those.
What Do I Need to Start the Process?
To initiate the buyout of your spouse, we require several documents to complete the new mortgage approval. Your spouse must agree to the buyout, as outlined in the separation agreement.
The documents we will need for review include:
- Signed separation agreement
- Income documentation such as a letter of employment and paystub, possibly CRA tax documents
- A list of debts you wish to pay off in addition to the spousal buyout
We're here to guide you through every step of this process, ensuring it's as pain-free as possible. Our program empowers you to retain your home, allowing your children to maintain their stability, be surrounded by their friends and continue at the same school during this difficult time.
Divorce may be an unexpected journey, but our Spousal Buyout Program is here to help you find your path to independence while keeping the warmth and stability of your home intact.
