Divorce – Division or Sale of the Property

Divorce – Division or Sale of the Property

The word divorce is always difficult to say and we do not want to think about it, but unfortunately it is sometimes inevitable, even after going as a couple to receive marriage help. Now, if the divorcing couple has a mortgage because they bought a house or condominium, it is recommended that they study the documents of their mortgage, because sometimes he or she wants to keep the house and buy the “half” corresponds to the spouse.

Currently, the maximum that can be refinanced is 80% of the value of the home. This leaves 20% of the capital not available for purchase and is forcing the sale of the house. Because of this, both insurers (CMHC and Genworth) will consider a purchase of marital home of up to 95% of the value of the home. The agreement is defined as a “purchase” and the spouse who remains in the property or real estate becomes the buyer.

Purchase of the matrimonial house:

Option 1:

Refinance the house in a conventional way (up to 80% of the value of the house).
One of the parties can refinance the property conventionally. This person will have to qualify for the mortgage and any other responsibility only on their income.

Option 2:

Refinancing through CMHC or the Genworth Marital Housing Purchase program. Qualified customers can refinance the home up to 95% of the value of the property.
The CMHC spousal purchase program will allow the capital to be used only to pay the spouse and not to other debts or fines.
Genworth will allow refinancing funds to be used to pay for other marital debts and mortgage penalties as long as they are specified in the separation agreement.

For refinancing of more than 80% loan to value, customers will be subject to insurance premiums. If the mortgage was originally insured by CMHC or Genworth, customers could face a lower recharge premium. If not, a full premium will apply.

Purchase of Real Estate:

At the time of the approval of the mortgage, in addition to the verification of income and other standard conditions, the lenders or banks will require the following:

Divorce Agreement – Separation. The lenders will not finalize the approval of the mortgage until there is a legal agreement of divorce that establishes the division of the assets.

This protects both the lender and the client, since, in short, the ex-spouse could file a claim against any asset in his name.
Proof of support payments. If there are child or spousal support payments and these are needed as income for the buyer to qualify, additional documentation will be required. The payment amounts must be specified in the Separation / Divorce Agreement and the lenders will require a minimum of 3 months of bank statements showing that the support payments are made / received consistently on the same day of each month and for the same amount .
An offer of purchase between the two spouses for the property in question (in the case of the conjugal purchase)

An appraisal will always be required in the case of a conjugal purchase. As this transaction is not a regular transaction, the lender or insurer will order an appraisal of the property to confirm the market value. In the case of a refinance, the valuation requirement may sometimes not apply, depending on the loan-to-value ratio.

 

Property-Division- Property division when a relationship ends
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