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Divorce is one of life’s most emotionally and financially challenging transitions. For many homeowners in Ontario, the biggest financial concern during a separation isn’t just legal fees or dividing assets, it’s the mortgage.
When relationships end, the question of “What happens to the house?” can cause a lot of stress. Whether you’re looking to stay in the home, buy your partner out, or move on and start fresh, understanding your mortgage options after separation is essential.
As a mortgage agent in Ontario, I’ve worked with many individuals going through this transition. In this blog post, I want to walk you through the mortgage related challenges that can arise during divorce and more importantly, how we can navigate them together.
The Mortgage and the Marital Home: What Happens in a Divorce?
In Ontario, matrimonial property laws typically treat the home as a shared asset, regardless of whose name is on the title or mortgage. That means both parties usually have an equal claim to the equity, unless a legal agreement says otherwise.
Here are a few common scenarios:
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One spouse keeps the home: This often requires a buyout of the other’s equity share.
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The home is sold: Both parties agree to sell and split the proceeds.
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Joint ownership continues: Rare but possible, especially for co-parenting arrangements.
Each option has mortgage implications that require careful planning and professional support.
Mortgage Challenges During Divorce
1. Qualifying Solo
If you’re hoping to stay in the home and assume the mortgage, the main hurdle is qualifying for the loan on your own. Lenders will look at your income, credit score, debt load, and financial stability post-divorce.
If you previously qualified as a couple, you may now need to prove your solo ability to carry the debt.
2. Equity Payouts
When one partner keeps the house, the other must usually be paid their share of the equity. This might mean refinancing the home to access funds. A specialized buyout mortgage in Ontario can help with this, but not all lenders offer them—especially if your credit has taken a hit or your income has changed.
3. Legal Costs and Debt
Divorce often comes with unexpected legal bills and increased personal debt. If you’re already financially stretched, this can impact your mortgage options. High debt-to-income ratios or missed payments can reduce your chances of refinancing or qualifying for a new loan.
How a Mortgage Agent Can Help
During this complex time, a mortgage agent can be a huge asset—not just to find you a mortgage, but to help you create a financial roadmap that supports your goals.
Here’s how:
1. Assessing Your Buying Power Post-Separation
After divorce, everything changes—your income, liabilities, and financial responsibilities. I can help you figure out what you can qualify for on your own, whether you’re hoping to stay in the home or buy a new one.
We’ll look at your total picture: support payments (received or paid), other debts, income sources (including child tax credits), and credit standing.
2. Finding Creative Mortgage Solutions
There are many programs that aren’t widely advertised, such as:
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Spousal Buyout Programs: These allow one spouse to buy out the other using up to 95% of the home’s appraised value.
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Refinancing After Divorce in Canada: A refinance can consolidate joint debt, fund a payout, or reduce monthly payments.
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Co-signers or guarantors: If you need help qualifying, a trusted family member might be able to co-sign temporarily.
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Alternative Lenders: If your financial situation has changed drastically, alternative or “B” lenders may offer more flexible terms.
The key is knowing where to look and how to present your application—a big part of what I do.
3. Navigating Legal and Financial Coordination
During separation, you may be dealing with a lawyer, financial advisor, and family mediator. As your mortgage agent, I work alongside these professionals to make sure your mortgage strategy fits into your larger separation agreement. Timing is everything, especially when coordinating payouts or transfers.
Tips to Prepare for a Mortgage Post-Divorce
If you’re thinking about separating or are in the early stages, here are some ways to prepare financially:
✓ Get a copy of your credit report
You’ll need to know where you stand. Errors or outdated info can impact your ability to qualify.
✓ Gather income and asset documentation
Include employment income, support payments, and any savings or investments you may have.
✓ Understand your current mortgage terms
Do you have a penalty for breaking the mortgage? Is it portable or assumable? These factors will influence your options.
✓ Talk to a mortgage professional early
Even before legal proceedings are finalized, we can begin planning and exploring pre-approvals.
Emotional and Financial Balance
Divorce isn’t just a financial decision it’s an emotional one, too. Many clients I work with are overwhelmed by the pressure of “figuring it all out” while trying to manage kids, work, and their own healing. One of my goals is to remove some of that pressure by guiding you through the mortgage and housing side with clarity and compassion.
Whether it’s helping you stay in the home to maintain stability for your kids, or supporting you in creating a fresh start, I’m here to walk the journey with you.
Final Thoughts: You Have Options
If you’re going through a divorce or separation in Ontario and feel overwhelmed by the financial side of things, know that you’re not alone and that there are real, practical solutions available. Mortgage options after separation aren’t one-size-fits-all, but there are paths forward that can support your next chapter.
As a mortgage agent who understands both the financial and emotional layers of divorce, I’m here to help you weigh your options, make informed decisions, and take confident next steps.
Let’s chat. Whether you’re staying, selling, or starting over, I’ll help you understand what’s possible and how to get there.
Kat Brazier
Mortgage Agent L2, MPFG
info@katbrazier.com