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You may be wondering how a divorce can affect your mortgage. You’re not alone! Canadians are increasingly concerned about this, as it can have a major impact on their daily lives and finances. But what impact does it have? And what can you do about it?
Divorce often means you get to keep your house. That’s because the laws that govern divorce in Canada talk about the “applicable marital agreement” of a couple. When you sign a mortgage with an agent, there is no such thing as a marital agreement. However, with some clever planning (and by extension, negotiation) you can still get your divorce-related finances in order.
Can I Get Mortgage To Settle my Divorce?
Applying for a mortgage after a divorce can be harder if you are still on the joint mortgage of your marital home. This is especially true when your ex-spouse fails to keep up with the mortgage repayments.
Divorce can have a very real effect on your finances and mortgage. A mortgage should be seen as a stable investment; it helps provide you with the money you need for everyday necessities. If your marriage is ending and one of you has property but doesn’t have the means to consolidate debt or pay certain recurring expenses, it’s safer for both parties if each individual keeps their own finances separate.
Getting Mortgage After a Divorce
Some lenders will immediately refuse your mortgage application if you are already connected to another mortgage. That is why a mortgage broker can be useful in such situations. Reach out to us if you are looking for a lender who will accept you in such a case. We will also get you the best deal for your circumstances.
When you get divorced, you have to decide whether or not to continue paying your mortgage. If you do, it’s important that you understand the rules for how much time you’ll need before making a decision about your mortgage.
What Happens to Your Existing Mortgage When You Get Divorce?
You’ll have an automatic right to stay on your mortgage if you pay it in full and on time for the last three months of any payment period (the period when your payment is due). But if you don’t pay it in full and on time for either two months or six months of any payment period, you’ll lose this automatic right.
If your spouse wants to take over paying the mortgage after a divorce but has no income from his or her own source of income, he or she may be able to claim spousal support from the family court judge. This will allow him or her to keep up his or her share of the household expenses while he or she tries to find work and earn enough money so that they can afford their own place again.
What Are My Options If I’m Getting Divorced?
If you’re in the midst of a divorce and have a mortgage, there are several options available to you.
We’ll start with the most obvious: You can get rid of it. If you’re not using the property as a primary residence, it doesn’t matter whether you have an income-based or equity-based mortgage because either way, you can just pay off your mortgage and move on with your life.
If your home is being used as your primary residence and you want to keep it, it’s important to consider what will happen to your mortgage if you end up losing custody of your children. In these cases, it’s often not in the best interest of everyone involved if one parent takes over paying off the debt while the other continues making payments on their end. It’s better for everyone if both parents work together to try and come up with a resolution that works for everyone involved.
Another option is an adjustable-rate mortgage (ARM). An ARM allows you to make monthly payments based on how much money you earn at different times throughout the year—so if your income fluctuates from month to month (which happens when someone loses an income-producing job or quits their job altogether), then having an ARM will help ensure that.
So the bottom line is if both you and your spouse have good credit scores, it’s unlikely that a divorce will have an impact on your ability to qualify for a new mortgage. But if your ex has bad credit (or if you’re simply concerned that your credit may be suffering due to your divorce), it could be smart to check in with the lender before you start shopping around for a new property. If they give you the go-ahead, buying a home again may not be so difficult!
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