A spousal buyout is an option to clients who are separated or separating (married or common-law) where one wants to keep the home but needs to buyout the other. It allows the spouse keeping the property to apply just like it was a brand new purchase allowing them to go back to 95% of the value of the home.
What Can The Equity Be Used For?
- payout of the existing mortgage (any breakage penalty cannot typically be included)
- paying the other spouse out of the home
- joint debts (if indicated in the separation agreement)
Equity cannot be used for any reason other than the above.
Other Items To Be Aware Of:
- both parties name must be on title before this is requested and must stay on title until this transaction changes it to the party keeping the home
An option to clients who are separating (married, common-law or even siblings can use this program), where one wants to keep the home but needs to buyout the other from equity in the property. This program allows the net mortgage back up to 95% of the value. So the remaining owner in essence can start back at 5% down.
What Documents Will I Need?
- An offer to purchase signed by both parties showing one selling it to the other
- A separation agreement that includes which party is to take over the property
- The lender will require a full appraisal (cost approx. $300)
- Standard loan documents (ex: employer letter, paystub, etc...)
What Can The Money Be Used For?
- payout of the existing mortgage
- paying the other owner out of the property
- joint debts (debts must be referenced in the separation agreement)
Note: the money cannot be used for any reason other than the above. No reno's, no cash draws, legal fees, etc...
Other Items To Be Aware Of
Both parties name must have be on title before separation and both must stay on title until this transaction changes it.
What Do I Do Now?
Get pre-qualified to take over the property before instructing your lawyer to add it to the separation agreement.