Going through a divorce or separation is challenging, with many crucial decisions to be made. One important aspect you may not be familiar with is the availability of mortgage products specifically designed to help during these times. A spousal buyout mortgage allows one partner to refinance the property to buy out the other’s share, simplifying the separation of assets.

For many couples, the family home is not only your largest asset but also where most of your equity is tied up. In the event of a separation, leveraging a spousal buyout mortgage can facilitate the process. This type of mortgage allows you to buy out your ex-spouse’s share of the property up to 95% of its value. Similarly, if your ex-spouse wishes to retain the property, they can use the same program to buy you out.

Do I need a finalized separation agreement?
Yes, a signed separation agreement is necessary to qualify for this type of mortgage. The agreement must detail the division of all assets, including who keeps the home.

Can I use the proceeds for home renovations or to pay off loans?
No, the proceeds from a spousal buyout mortgage must be used strictly to buy out the other owner’s equity share. They can also be used to settle joint debts as specified in the separation agreement.

What is the maximum amount I can withdraw?
The separation agreement will determine the maximum equity you can withdraw, which includes buying out the other owner’s share and/or settling joint debts, up to a maximum of 95% loan-to-value (LTV).

What is the maximum permitted LTV?
The highest LTV allowed is the lesser of 95% or the sum of the remaining mortgage balance plus the equity needed to buy out the other owner and/or pay off joint debts. The property must be the primary residence and owner-occupied.

Who needs to be on the property title?
All parties involved must be current registered owners as confirmed by a title search by a solicitor.

Do the parties have to be a married or common-law couple?
No, the spousal buyout option is also available to other co-owners such as friends or siblings, though this is considered an exception and requires approval from the insurer.

Is a full property appraisal required?
Yes, a complete appraisal of the property is necessary as this process is similar to a private sale.

​

Navigating through a separation involves many complexities, but understanding your mortgage options, like the spousal buyout, can offer some relief. Working with an experienced and unbiased mortgage broker can further simplify this process. If you have any questions or need guidance on how a spousal buyout mortgage works, please feel free to call me at (705) 333-4338 or reach out online!
​