Homeownership is possible after divorce
A big part of our public celebration of marriage is the recognition that the newlyweds are establishing a home together.There is, unfortunately, no corresponding support when that home is broken. The regrettable fact is that one out of three Canadian marriages will not last.That statistic adds up to a lot of people changing their domestic arrangements.
Amid the confusion and pain of a divorce, there is the very pressing business of making housing decisions — generally under reduced financial circumstances. There is, however, some hopeful news. Amid the great new mortgage options that have emerged in the past few years, there are longer amortization and cash-back mortgages that spell financial relief for divorced couples — by making it easier for them to get back on their feet in a new home.
Let’s start with a look at what happens to the family home when a couple divorces. There are two real options for divorcing couples with a family home, and both come with some challenges:
- Sell & split: Sell the existing family home and split the assets. This is the choice of most divorcing couples —for its sheer simplicity. But don’t just mentally divide the value of your home in two. Keep in mind that you may be selling under some time pressure — which means that you may not get your ideal price. Also,remember that the two of you must share both the profit and the expenses (legal, realtor, moving etc.). Most couples are disappointed at how little they are able to take away from the sale of the marital home.
- Buy it out: An equity buyout is another way of approaching the sharing of assets. Either you or your former spouse opts to remain in the marital home, but must “buy out” the equity share of the other partner. There are some challenges, of course: You must agree to a fair market value, and you must assess carefully what the equity share should be. And there is some inancial fallout from this option, too. In many cases, the existing family home simply can’t be supported byone partner. And the equity payout to the partner who vacates the home may not be enough for a down-payment on a new home — not to mention furnishing a whole new space.
A mortgage broker can help give both partners a fresh start
Many divorcing Canadians, then, are walking away from their marriages with insufficient financial resources to purchase a home with a standard downpayment, and adequate funds to purchase required furniture and household items. The good news is that cash-back and 35-year mortgages can make it easier for both spouses to get into their next home. After all, inancially speaking, it’s in your best interests to remain in the housing market. And if you have children, it’s healthy for them to see both parents in a home.
An independent mortgage broker can help you sort through your options. If you have a stable employment record and a satisfactory credit record, then you may have what it takes to get a mortgage. As a former homeowner, you’ve already proven yourself to be a competent and reasonable handler of financial debt. All you need is a fresh beginning. With a 35-year amortization lowering your monthly payment and possibly a cash-back or borrowed funds for the downpayment, you can use your existing funds to help with other expenses — including necessary appliances or furnishings.
Divorce doesn’t need to spell the end of financial hope. An experienced mortgage planner can help you get back into a home of your own.