Divorce is always a very difficult time, and the changes to the mortgage rules last year have made it more difficult. Most often one spouse will want to remain in the home and will need to buy the other out of the remaining equity.
With the latest rule changes, refinances are maxed at 80%. This leaves 20% of the equity unavailable for the buyout and is forcing the sale of the home.
Both CMHC and Genworth will consider marital split payouts up to 95% of the value of the home. The deal is packaged as a “Purchase”; the spouse remaining in the home becomes the buyer on the purchase.
This allows for greater payouts and/or debt consolidation to help facilitate the separation.
Not all the banking institutions are offering this product. Most of the major institutions are NOT!
We have quite a few mortgage lenders that will assist with the “divorce refinance” program.
The criteria is as follows:
- Must have good credit
- A finalized separation agreement will be required prior to closing.
- In order to “mirror” a purchase transaction, a “private” purchase and sale
agreement will need to be created between the two parties (a lawyer can draw this
- Land transfer tax is “eliminated”, they are classified as a “Love Interest”.
- Lastly, a statutory declaration will be signed by the spouse who is relinquishing
interest in the property.
As a mortgage broker I know which lenders will consider the above and which will not. Independently you may have
to try several different banks to find one that will assist you. If your credit is border line on the minimum requirements,
several inquiries could reduce the credit score therefore affecting the approval. (I have seen this happen.) As a broker,
I pull one credit bureau to obtain an approval.
There are no special conditions with this product. All pre-payment privileges, discharge cost and rates are the same
as with any other CMHC/Genworth insured mortgage.
I have been through a divorce myself, and fully understand the financial stress that can be associated
with trying to remain in your home.
I would like the opportunity to assist you with this or any other financial needs.