The month of January is known as “divorce month” according to family lawyers because it is after the holiday season that they receive the most divorce and separation petitions: this allows all these changes to be considered while planning to protect children as much as possible.
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But how to dispose of the family home? To sell it? Redeem Spouse Share? What’s the best way to get out of there and move properly? Here are some practical ideas:
1. SIMPLIFICATION: WHO IS/ARE OWNERS AND WHO WOULD LIKE TO REMAIN OWNER?
This directly affects the options. Confirm your expectations and needs: Is there consensus on these points? To distinguish from irritants and emotions … as much as possible!
2. WHO CAN SAVE THE HOUSE?
You must have the financial means and at the prevailing interest rates. You must re-qualify as sole owner with your financial institution and possibly CMHC. You must have the necessary income, but also good credit and some leeway.
3. VALUATIONS AND OPPORTUNITIES: HAVE THE VALUE OF YOUR HOUSE VALUED
You need to take the market value and not the community value as this often differs from the price you can get when you sell it. Then have your file checked with your financial institution for a possible redemption. The assumption of the mortgage by the ex-spouse does not absolve them of their responsibility in the event of a default on your part, unless the bank agrees to indemnifying the co-borrower. Check a possible agreement with the ex-spouse: do you have his consent to buy his part or give him yours? Are there any facilitating conditions or other additional costs or past investments to be taken into account? If the disagreement requires a court decision or sale of the home, have an attorney confirm your options and timelines.
4. DISTRIBUTION OF SHARES IN THE HOUSE
Let’s say your home has a market value of $400,000 and your fellow borrowers make a down payment of the same amount. So for a $150,000 mortgage, $250,000 must be halved ($125,000 each). The person who keeps the home can refinance the home up to $275,000 and pass the cash portion on to the other spouse. In the event of a sale, the pair will receive $125,000 in cash (I’m assuming there are no selling fees here for simplicity). If the co-borrowers had unequal initial deposits, this should be taken into account when dividing the shares.
5. IF THE EQUITY IS NOT SUFFICIENT FOR REFINANCING
The remaining person must advance the money. Example: If the value is $400,000 with a $380,000 mortgage, you cannot refinance; There’s only $20,000 equity, so $10,000 each. Whoever keeps the house must pay back the $10,000 to the other spouse.
advice
- Common children? Check all the options: is it possible to sell or buy back in the neighborhood to keep going to the same daycare and school?
- Without children: do you want us to adapt this property to your needs?
- Favor an amicable settlement: don’t lose the value of your home through legal fees!
- Emotions are bad advisers: Turn to professionals, not family or friends, for sound advice.
- It’s not about the past, it’s about the future: you have to live with the sadness… but new opportunities in real estate can be very beneficial!
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