Most couples get married with the intent on living happily ever after. The sad reality is, that there are over 70,000 divorce cases in Canada every year. A divorce is an emotionally trying time for everyone involved and emotional upheaval can be increased by the logistics of dividing a major asset such as a home.
Important to remember, if you are legally married, then you continue to be so until the court recognizes otherwise. So, without another legal document stating that you are separated or divorced, you are still technically married and this means that you need your spouse’s permission if you wish to buy another property, or sell the current one. Welcome to family and property law.
There are some options to consider:
- One party keeps the home and refinances: If one of you want to remain in the home, you and your ex-spouse can request to have the mortgage refinanced. In most cases there’s a buyout, so the one who remains in the home has to raise more money to pay the other party out.
- Sell the house: This could be the simplest approach, since you will be left with the net proceeds after paying all the selling costs (realtor and legal fees) and property debts (outstanding mortgages and HELOC). The proceeds will be split according to what were agreed upon in the separation agreement or divorce settlement. You will know exactly the amount of funds you would have available to purchase a new property.
- Manage your expenses: A separation or divorce can be very expensive. One of the most important things to consider when leaving a marriage, is to maintain a healthy credit score. This will ensure financial independence and give you a good start to approaching home ownership solo.
Going through a divorce is a difficult time and finances may not be your priority, however, it should be. Your finances shouldn’t have to take a toll, especially your mortgage. If you are currently in this situation, contact our mortgage brokers to assist you with your best possible choices with regards to your mortgage.