When a couple decides to separate, normally their largest asset is their matrimonial home. I have worked with several lawyers who see the value of consulting an experienced mortgage broker for their clients. Why not call a mortgage broker directly and have them review your options, even if your mortgage is through a chartered bank? Mortgage brokers can be a good, unbiased source of information that will help you be financially objective in a time which is often emotional.
If your budget will allow, attempt to make your next move into a house that you purchase instead of resorting to renting. It can be difficult once you begin renting to get back into home ownership. Rent is expensive in Guelph, and if you have a family, you may find yourself paying more money towards rent, that could otherwise go to paying down a mortgage.
Here are some key things to consider if you’re going through a separation or divorce when reviewing how to divide the asset of your matrimonial home:
Understand how much equity you have in the matrimonial home
Getting pre-approved is always a good first step even if you’ve owned a home before your separation. Work with your mortgage professional to help you determine home much equity you have when this asset is divided. In many instances if you’ve owned your home for 10 years, and the equity in your house is divided – after paying out consumer debts there may only be 5 to 10 percent left over to put as a down payment on your next house. I often find that people over-estimate how much equity they actually have. Ensure that you consider the penalty to discharge the current mortgage on your matrimonial home including the legal and the land-transfer tax on your next purchase (in the case you are selling the matrimonial home).
Child support can be used if there is a 6 month history
Explain to your mortgage professional what child support you’re entitled to receive as noted in your separation agreement. If the separation is recent, you may not be able to use child support as a supplement to your income to help you qualify for a new mortgage. That’s because most financial institutions require a six-month history of the child support payments. However, if you are required to pay child support, this will immediately count as a liability which will limit the new amount you can qualify for in a mortgage.
Mortgage brokers have more options than your bank
Don’t be discouraged if you initially went to your own bank and they told you could be pre-approved for a mortgage significantly less than what your own living expectations are. Banks aren’t flexible in their mortgage-lending criteria. True mortgage brokers who have access to mortgage products outside of chartered banks can give you options. Your mortgage broker can help you work through scenarios because they have good, cost-effective options that will help you buy your next home after a separation or divorce.
