Relationship Breakdown

Relationship breakdown?

If you own and live in a home with a sibling, partner, or spouse, common law or married, and have decided to part ways, then read on. Over my 18 years as an Edmonton Mortgage Broker, I have helped many through this stressful situation of separation. Some got to keep their homes while others had to sell.

If you are currently struggling in this situation, I highly recommend speaking with an experienced knowledgeable Mortgage Broker. Too often, I hear there isn’t enough equity in the home for one partner to buy the other partner out. I thought I would share a little about how the program works. Under the spousal or family buyout program, one partner can buy the other partner out with as little as 5% down payment coming from the equity in the home.


1. Separation Agreement:

It is imperative to speak with an Edmonton Mortgage Broker early on in this process as your assets and debts need to be noted in the Separation Agreement in a very specific way (example – car loans or lines of credit may need to be noted as joint marital debt. Knowing ahead of time exactly what needs to be in your separation agreement to ensure a smooth transaction helps to reduce the chances of incurring additional legal fees should any amendments need occur.

2. Determine the Value of Your Home:

Before you agree on how to split up the assets and debts accumulated during the relationship, start with determining the value of the home. This is done by having an appraisal done on the property. Once you have the true value of the home, then subtract the remaining mortgage balance and that amount remaining is the equity. Depending on how you decide to move forward, there may be other costs to keep in mind. These costs could be realtor fees, payout penalties and joint debt that has been agreed upon to be paid out.

Decide what to do with the property

Whether one of you is going to keep the home or you have decided to sell it, there is more information you should be aware of that will factor into your decision.

• If you decide to sell the property, current market conditions play a big part in the value. If you have to sell quickly, you may not get as much as initially expected.

• If you have enough equity in the home to refinance up to 80% of the property value and remove the other party from the mortgage and title, speak with a Mortgage Broker sooner rather than later to ensure there is enough equity and this option is even feasible.


Be aware that this will now be like a normal new purchase contract, so we will require all the standard documents to confirm income, employment and down payment. You will also need a separation agreement that clearly spells out what is happening and if any debts are being paid out as well as an appraisal to confirm the property value.

What not to do:

Given you have decided to separate, ensure that you keep your credit in check with no missed or late payments, as this negatively affects your credit score. Having a great credit score (repayment history) helps make the process a little easier to manage.

One size does not fit all.

As each individual situation is unique, so are the solutions. The points above are just meant as a starter conversation and does not replace an in-depth discussion with a qualified professional. Having an idea what options are available ahead of time can help make this trying process and little easier to manage.

If you are going through a separation or know someone who is, please contact your Edmonton Mortgage Broker at (780) 244-0505. I can provide them with some options and connect them with a Real Estate Professional that will provide them with the pre-listing service they require.

Categories: Edmonton Mortgage Broker, Mortgage Advice