For incidents of divorce or separation, there are mortgage products available to be able to refinance your property and buyout your ex-spouse. Spousal buyout allows for a party to purchase the property from an ex-spouse or co-inhabitant for up to 85% of the property’s value.
Spousal buyout is typically used for married and common law couples, but also co-inhabitants who wish to move or relocate, as long all parties are registered on the current title. Documentation for a legal separation or divorce is required to qualify for a spousal buyout program. In the case of co-inhabitants, a specific clause must be added to the purchase contract to outline the buyout.
Depending on the circumstances surrounding the equity in your home and the terms of the divorce or separation, you may need to have the home appraised, however appraisals are not required in every situation.
Spousal buyouts allow you to renovate or pay off debts, as long as the ex-spouse is getting the amount agreed upon. The maximum equity withdrawn is the amount agreed upon in the separation agreement to buy out the other owner’s share of the property and/or retire joint debts, not exceeding 85% loan to value.
Cash-out refinances come with slightly higher interest rates than rate-and-term refinances because you’re taking out more money. Therefore, comparison shopping for the best rates is vital. At Juno Mortgages, we will help you shop around for the best refinancing rates for your mortgage, and help you leverage your debt consolidation strategy to find the best interest rate possible to fit your needs.
The loan to value is the lesser of 85% or the remaining mortgage + the equity required to buy out other owner and/or pay off joint debt for the primary residence.
Juno Mortgage can help assist you with any of your questions about spousal buyout programs and help you with this transition to keep your home equity.
