Unfortunately, statistics indicate that couples end up divorcing or separating in about 50% of relationships in current times. I have worked with couples where the split was amicable and also with ones that were…quite antagonistic. Obviously I am not a relationship counsellor but get involved when one of the party wants to purchase the home they are living in from the other person. Or one or both come to me in order to figure out the financing on a new purchase.
In terms of mortgage financing, the most important thing to have is a legal separation or divorce agreement that outlines all the financial obligations and split of the assets. Most major lenders will want a copy of this. Why?
Well, until the finances are settled it really is hard to determine where your downpayment will be coming from and whether you will still have “debts” outstanding when the relationship is over.
Will there be support payments that one person has to pay to the other? Are there any credit card, car loans, etc that will still be owed? If there is we will have to take that into consideration as a debt.
Who is getting what and how much? This will determine what you will have for a downpayment. Or if one is buying out the interest in the current property, what is the value that is agreed on? What is the split? This will determine what size of a mortgage is needed.
Obviously, there are usually a lot more things to agree on other than financial in a situation such as this. However, from a mortgage financing point of view the division of assets and financial obligations is the key.
If you require assistance or have a comment please contact me.