Dividing financial assets between divorced couples can take a long time, and is often chaotic. After all, it’s easy to say that a matrimonial home is a shared asset that must be equitably divided. However, when this theory is practiced in real life, it becomes complicated.
Generally, each spouse has the right to claim 50% of the home equity minus the amount contributed for the purchase of the home. To avoid any complications, you can check out the following tips.
Keep the original mortgage
In case that one of the spouses agree to stay in the house after the divorce, make sure that he or she is able to continue paying the mortgage payments. Otherwise, if both of you agrees to keep the original mortgage, see to it that you can pay the mortgage in a timely manner. If you are having trouble managing your debt, you can seek advice from a mortgage broker.
Sell the matrimonial home
Selling the house might be your best option, especially if you want to get rid your mortgage liability after the divorce. The fund acquired from selling the house can be used in paying off the existing mortgage. Just make sure to sell it before finalizing the divorce to avoid issues such as a decreased house price.
Split your joint accounts
As soon as you decide to separate or divorce your partner, you should immediately take action in separating your joint accounts. The first thing to do is to ask for a credit report of all your financial obligations. In case you’re using the name of your spouse for credit, you should open your own account before the divorce is finalized.
Buy the share of your partner or vice versa.
One party could always buy out the share of the other. If ever this happens, both parties should agree to the present market value of the property. If the price isn’t mutually agreed upon, the last option is to sell the house in the open market and both parties can place their bid on it.
Once your former spouse finally buys out the house, you should ask your lender to confirm that your name is no longer included on the mortgage. This way, you’ll be out of the hook for possible mortgage balance of the house.
There are instances in which the spouse who wants to buy the house isn’t financially eligible due to some reasons such as child support payments or alimony. The good news is that there are other flexible mortgage solutions that can provide solutions to individual circumstances. You can ask mortgage broker Toronto for advice.
Going through the process of divorce is expensive and unpleasant, but getting help from a good mortgage broker can spare you from any unnecessary hassle. It may also save you some money. When worse comes to worst, you can always seek a legal advice about the proper way of handling mortgage after a divorce.