Divorce & Mortgage Buy-Out Details, Canada, May 2024
Important data for separating / divorcing partners, this may help with “Buying the ex-spouse out” of a divorce, when some debts need to be rolled in.
The way most lawyers and Big-6 banks do it:
as a refinance, max loan is 80% of the appraised value of the home,
and you get refi rates – the highest – today:
- 3 year fixed 5.76%, 5 year fixed 5.59%
and usually NO debts can be rolled into the mortgage past that 80% of the home value.
with OUR WAY/ Broker way…
we do it as “a purchase after marital breakdown” which allows
max loan of 95% LTV (of the home value) – which usually makes ALL THE DIFFERENCE in a buyout situation.
- BEST RATES again: 3 year fixed 5.39%, 5 year fixed 4.99%
and usually Most/ All/ some debts can be rolled into the mortgage – at no extra cost, depending on your lending ratios.
Data from a similar file –
As long as the deal IS insurable (meaning it conforms to CMHC rules and guidelines) to get that lower rate – actually 0.6% LOWER as of today – then we need an offer to purchase too. Most lawyers do not want also write an “offer to purchase,”
If the Big-6 bank is doing it as a conventional refinance then an offer to purchase is not needed.
Banks don’t have substantially different rates for insurable and conventional like we do. (o.4 to o.9% rate difference makes a huge difference.)
So yes, we can get a separation done without an Offer to Purchase as long as at least 20% of the value stays in the home and we use refinance rates at 0.6% higher than broker best rates today.
Considering customers will leave us for 0.05% and this is 0.6% – that is >10x multiple of what customers consider “worth leaving us for” this is an important way to get divorce deals to work better for everyone.
Mortgage Mark Herman, top/ best Calgary Alberta Mortgage Broker
Divorce and Mortgages
We do lots of mortgages for divorces – because they are complicated. Both people want to buy after or one buys out the other. BUT, you have to set the seperation agreement up correctly so this can happen.
Banks mess this up EVEY time as the math is complicated and people at banks are not licenced mortgage brokers 99% of the time.
Why not use the #1 mortgge brokerage in all of Canada for 2 years in a row to ensure your seperateion agreement is set up to work for both of you?
Mark Herman, Calgary Alberta mortgage broker and divorce mortgage specialist.
Below are some interesting numbers for Divorces:
If the Calgary- Red Deer – Edmonton Corridor was an actual country it would have:
- a growth rate only 2nd to China – in all the world and
- the highest divorce rate in all the world.
Other Key Findings
•Annual average of divorces in Canada: 71,000
•Marriages that won’t reach their 50th anniversary: 43%
Divorce Rates around the World
Sweden 55%
US, Australia 46%
United Kingdom 43%
Canada 40%
Israel 26%
Switzerland 25%
Greece 18%
Singapore, Poland 17%
Spain 15%
Italy 12%
Marriage rate in Newfoundland and Labrador 54.3% (highest in Canada)
Marriage rate in Quebec 37.5% (lowest in Canada)
Month with the highest Separation applications? January
Mortgage Rules for Divorces, updated for MArch, 2015:
In situations where two parties are on title to a property in the process of a legal separation where one party will keep the existing property, the following guidelines will now apply:
•Applications may be submitted as a purchase loan up to 95% LTV – or 5% down
•Both parties must be on title to the property prior to the legal separation
•Since this purchase transaction is non-arms length, a full internal appraisal is required
•The following documents confirming the sale price and transfer of title must be on file:
- Finalized separation agreement
- Offer to purchase