It happens more than you might think. I get a call from a woman (rarely men it seems) who is preparing to leave her spouse. Sometimes he doesn’t know yet. She wants to buy her new home in advance, without him on title or on the mortgage. Even more challenging, the separation isn’t final and all her net worth is tied up in their house. Sometimes she doesn’t income-qualify on her own, so she doesn’t think she can buy him out.
Most “A” type lenders are going to ask for a copy of a separation agreement. Why? For starters, they need to know that the person leaving isn’t on the hook to pay support. And, if there is support being paid to the woman, they need some kind of verification. Or, what if the assets declared on a mortgage application are spoken for in the divorce? Lastly, this requirement protects both parties, because “what’s good for the goose is good for the gander.” Meaning, if she can go into debt that he might still be legally liable for, so could he.
Most women react with some anger, frustration and even rebellion. They’ve got great jobs and credit, so why should they still have to have the man involved? Others deflate and shrink away from their hopes for the future.
I do my best to be objective and supportive without getting too ‘into’ their lives. It must be so stressful, especially if the couple is still living together while their house sells (or doesn’t).
Is it hopeless? Can I get them a mortgage without a separation agreement? Sometimes yes, and sometimes no. Many criteria come into play before I can say for sure. And if I give away all my trade secrets accumulated over the years, then you might not call me when it is time for your next mortgage 🙂
Caroline Lennox
Mortgage Broker and iLease Financing Professional
Invis – Canada’s Mortgage Experts™
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The article is somewhat helpful. Situations vary widely and I Have yet to find a “divorce coach” in a Canadian city. I am willing to bet that IF there were an online site, with someone knowledgable with the financial world, some degree of law as it pertains to property, and a knack for problem solving, you’d have a steady stream of clientele planning their next move.
I believe there is a market.
A relevant article!
“Life after divorce: Get your finances on track” By Gail Johnson | Insight – Tue, 25 Sep, 2012
Even in the most amiable of breakups, figuring out finances after a divorce can be headache-inducing. Whether it’s emotional bonds or financial assets, splitting ain’t easy.
And the financial lives of Canadians are becoming ever-more entwined. According to a recent survey from TD Canada Trust:
68 per cent of Canadians in a serious relationship have a joint bank account
64 per cent have a shared financial plan
52 per cent have a joint credit card
72 per cent own a home together
Nearly a quarter of divorce proceedings last longer than two years, which makes it increasingly crucial for newly-single Canadians to regain financial stability as soon as possible after a split. “It’s important for newly-single Canadians to stabilize their financial situation after a break-up so that they don’t start taking on debt,” says TD Canada Trust senior vice president John Tracy.
There are several steps people can take to ensure their finances are intact when their relationship isn’t. For more info check out this article.
I do agree with all of the ideas you have presented in your post. They’re really convincing and will definitely work. Still, the posts are too short for beginners. Could you please extend them a bit from next time? Thanks for the post.
Hi “Beats” and thanks for the comment. These situations are usually so complex that I would have to write a book to cover all the possibilities. Each client application has to be handled on a case-by-case basis. I’ve considered putting on a short webinar, workshop or seminar (3 hours tops) and maybe bring in a guest divorce lawyer as a guest speaker. Do you think people would come? It takes a lot of time, money and effort to put one on. Or maybe an e-book about it? I’ll give some thought to how I can extend for next time … perhaps even if I link to a more detailed blog. The limit on this blog is 700 words … about double what I wrote this time, but I find most readers bail about half-way through a long article. If you have any specific questions, feel free to write or to post them.