Ending a relationship isn’t easy and sharing a mortgage makes it harder. While some couples choose to sell to outside buyers, it is possible to buy out your ex-partner’s equity and keep your property (there is also the opportunity to bring the mortgage up to 95% of the value of the home again, too!). This is a great option for parents as continuing to reside in the family home often limits the separation’s effects on children. Here, Mortgage Broker Lisa McInnes outlines how to buy out your partner, step-by-step.
How to Buy Out Your Partner: A Step-by-Step Process for Canadian Homeowners
1: Determine Who Wants the House
Former couples must plan what future living arrangements will look like and decide which partner should remain in the home. This individual will have to qualify for a new mortgage and penalties will apply for breaking the current mortgage.
2: Find a Mortgage Broker
One of the first things a Borrower should do is find a good Mortgage Broker to discuss financing options. It is important to realize that not all Brokers have the same amount of partner buy-out experience, so make sure your Mortgage Broker has focused insight into what products and resources are available to you. Together, the Borrower and Broker will examine eligibility factors like credit score, income, and collateral. Lisa has had great success helping recently-separated clients through innovative products like The Equity Buyout Program*. Contact Lisa directly through this site in order to learn more.
*and please note, The Equity Buyout Program isn’t just for spouses or common-law partners! This program can also be used by siblings and roommates.
Prior to finalizing a separation agreement (Step 3), Lisa can also help you strategize your needs. This will help ensure that the agreement will allow you to qualify for a mortgage. It’s important to have this conversation prior to the finalization of the separation agreement so you do not incur expenses associated with amending the agreement.
3: Call Your Lawyer (or a Mediator and a Notary)
It is important to note that vital information cannot be verified without a separation agreement. For that reason, a separation agreement must be completed before the Mortgage Broker can submit a re-qualifying mortgage application. A family lawyer can help ensure a fair deal for both parties, or former couples can work with a mediator to draft an agreement. However, because a separation agreement is a legally binding document, formal notarization must occur before moving forward.
4: Begin the Mortgage Re-Qualification Process
The mortgage re-qualification process is similar to the initial application process. Once all information is gathered, your Broker will strategize how to best present your strengths on the application and will research ideal financing options. The Borrower and Mortgage Broker will then decide upon the best Lender to approach and the Broker will submit the Borrower’s application.
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Step 4: Transfer Funds and Celebrate!
With the help of Lisa McInnes of Verico Paragon Mortgage Inc, it’s rare for applications to be denied. Lenders are happy to extend mortgages to strong applicants. At this point, it will soon be time to sign the contract and transfer funds.
Congratulations, you are now the sole owner of your home!
While it may be true that separation is rarely easy, a great mortgage broker can make it a lot less complicated! Are you ready to learn more about how to buy out your partner? Follow this link to explore mortgage solutions with Lisa McInnes of Verico Paragon Mortgage Inc or begin the pre-approval process.
