What does it take to get 95% ltv spousal separation mortgage?

by Dennis C.
(Burlington, Ontario)

I have been told that I can take out a mortgage on my house at 95% of it's worth when I'm separating from my wife. How does this work and what will happen to my house if I get turned down for a loan because of bad credit.

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Jan 17, 2015
About getting a 95% CMHC spousal buyout (spousal separation mortgage)
by: Marie Copeland, Mortgage Broker and Owner of Axcess Mortgage and Loans Financing

Dennis thank you for your questions about a spousal buyout CMHC mortgage to buy out your spouse.

Visit DIVORCE ASSETS for more home mortgage loan information: "Division of property in divorce"

The CMHC spousal separation mortgage applies to both the legally married spouses as well as common law provided both spouses are on title of the home at the time of separation.

Division of property in divorce is a complicated process separating spouses struggle with. Generally, a matrimonial home is a big part of the divorce and property matters, whether you are legally married or are common-law spouses.

First be sure to speak with a family lawyer or a marriage mediator about dividing assets in divorce process and to get a separation agreement in place. This is the most important document both you and the separating spouse will need to move forward.

So yes, you can get a spousal separation or a CMHC spousal buy-out mortgage by refinancing your matrimonial home up to 95% of appraised value to pay out your spouse. To qualify for mortgage CMHC insured, you will need enough stable income and good credit.

If your house appraises at $500,000 or less, and you qualify for an insured mortgage, you can get up to 95% of home value.

If your home appraises over $500,000, you can get up to 95% of the first $500,000 and up to 90% of the remaining value up to $1,000,000.

95% spousal buyout CMHC mortgage for separating spouses is a CMHC insured home loan and although technically it is a refinance - it is treated as a new purchase of your spousal home and the insurers requirements apply as in any home purchase mortgage.

Before you can start this refinancing spousal buyout CMHC process you will need a Separation Agreement outlining your mutual division of assets agreement.

Just like any other insured mortgage you will need to qualify on the quality of your credit and income vs. expenses ratios, taking into consideration any spousal or child support payments as outlined in your Separation Agreement.

If you have income shortfall because you now have to include support payments as an expense, you can add a guarantor to supplement your income.

You will need an Agreement of Purchase between you and your spouse to buy out her share of the matrimonial home - again, the terms would be detailed in your Separation Agreement.

Now to your second question "What will happen to my house if I get turned down because of bad credit?"

Even if you have bad credit there may be options for you too so long as you have enough income to meet the home equity mortgage loan debt service ratios set out by lender and enough equity to get the amount of money needed as specified in your separation agreement.

Each situation is unique, so the best thing to do is to "Submit your application and get free mortgage assessment" or call me at 1 (905) 537-8815 for fast assistance. Let me assess all information specific to your situation to get you moving forward with your new life.

But in the most part there are home equity mortgage loan options that you can read about on this website.
Check out these articles:

"About getting home equity mortgage loans"
"How to refinance your home mortgage"
"Private loan lenders Ontario"

I hope this helps and I look forward to receiving your mortgage application.

Marie Copeland, FSU, Hamilton Mortgage Broker, serving clients Ontario wide including Toronto - Burlington - Niagara areas.

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