In many—if not most—divorces, the family home is the couple’s largest asset. It can also be a very emotional item. Very likely, you and your spouse decided in happier times that it was where you wanted to spend your lives together, and it may be where your children have lived most of their lives. This can make it difficult to let go and to assign a value to it. Because the house is so valuable and so important, it can be the biggest part of negotiations in settlement. Deciding what you’re going to do with the house often helps put other property issues into perspective, both financially and emotionally.
By now you should have a good understanding of the law in Ontario, and if not, you should read this blog post: Dividing property when a marriage or common law relationship ends in Ontario.
One of the many questions you may ask yourself is where you’re going to live. Of course, the option is always there to remain in your home. For many divorced parents whose children are still in school, this is the option that makes the most sense.
The goal in these cases is to keep life as steady as possible for them during this time of change, and keeping them in their same school, near their friends and support network, and in the home they know and are attached to might be in their best interest. However, this isn’t always possible, and every divorce is different. Let’s walk through a few of your housing options after you’ve gone through a divorce.
Selling your home.
Some people decide that selling their home is in both ex-spouse’s best interest. Mutually leaving your home and selling it jointly can help both of you get a start on this new season of your life, and you may be able to use the profits you split to leverage a new mortgage.
Options for staying in the family home:
Buying out your spouse
Although there are times when an ex- spouse willingly moves out of your home so that you (and any kids you two may have together) can continue living there, things don’t always go this smoothly. Sometimes, you have the option of buying your spouse out of the mortgage and taking full ownership of the home.
A word of caution here – many people who are going through a divorce have an emotional attachment to the home they shared with their ex-spouse. It may be that it’s the house that their children grew up in, or that they have poured a lot of time and energy into making it “home.” However, many people who could comfortably afford their marital home while they were married can’t afford to continue to keep it, pay the mortgage, pay insurance and taxes, and still have enough funds left over to live a fulfilling lifestyle. Make sure you evaluate the financial side of the equation before you commit to buying out your spouse and keeping your marital home by yourself.
If you don’t qualify for the mortgage on your own, an option is to ask another person to act as a joint borrower or guarantor. This person should have a good credit history and income. Before co-signing, make sure you both fully understand the responsibilities involved.
Once you’ve qualified for the mortgage, you need to have your former partner removed from the home’s title and released from the mortgage. You’ll have to pay fees to do this. If you don’t release your former partner from the mortgage, he or she could continue to be responsible for the mortgage payments. If you fail to make your mortgage payments, your former partner would be required to pay.
Buying a new home
Of course, you also have the option of buying a new home after your divorce. This may be a given if you and your ex have mutually decided to sell the home you shared, but it can be a challenge to purchase a home on your own. This is especially true if your credit is less than perfect, or if your spouse made significantly more than you did and contributed to your family finances accordingly before your divorce. Typically, it’s wise to take some time after your divorce to take stock of where you stand financially.
Sitting down with a financial planner can help you organize your finances and move forward accordingly. You may have to adjust your expectations of home ownership or downsize to a home that you can comfortably afford on your own. This doesn’t have to be a negative thing, though. Instead, view your home shopping as an adventure – you’re finding a new space that’s perfect for you and your family.
Renting is a possibility too.
In many cases, it makes sense to take some time before jumping into a new home purchase after a divorce. You want to make sure that the moves you’re making are emotionally healthy for both you and your kids, if children are part of your equation. Taking an extra year or more before buying a home can give you time to build your credit, let the dust from your divorce settle, take stock of your finances, and get a better understanding of your monthly cash flow needs and savings.
While you wait to buy, there are many rental options that could be a good fit for you. If you want to save a notable amount for a down payment or want to chip away at debt you’ve carried out of your divorce, downsizing to an apartment or townhome (if it meets your lifestyle needs) might make sense to save money each month. Going from home ownership to renting isn’t always easy, but if it helps you to achieve your long-term financial goals, it could be well worth it.
Weigh all of your options.
Don’t feel pressured to purchase a home immediately after (or while you’re still going through) your divorce. Only you will know when you’re emotionally ready to move forward and buy a home of your own, even if you’re already financially ready. And don’t think that just because you’re experiencing this time of change you need to jump into the first house that seems like an okay fit. You deserve to find the perfect home that meets your lifestyle needs.
Making the decisions of what to do with the family home during divorce can be extremely emotional and challenging. But know you are not alone, I am a specialist in working with couples going through separation and divorce.
The very best way to reduce conflict and to save money in the long run is to ensure that you can make the big decisions effectively with as much awareness, open communication and educational support where needed, as possible. I will help you to set realistic expectations by combining the very best data and my expertise. I am committed to being non-judgemental, supportive and transparent. I will never take sides, and truly want what is best for BOTH of you.
Because you have spent years, if not decades together, your lives are very intertwined, and this whole process needs to be handled with compassion, nurturing and understanding. I too have been where you are – and so I understand it
on a visceral level. I can also help to reduce conflict and overwhelm during this strenuous time because I have a vast amount of education in psychology for supporting couples during difficult transitions.
Please let me know how I can be of help to you. I know how stressful this all can be - and there are no questions too small. We can get you through this - together.
Contact Krista Lachapelle today (905) 251-9699.