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What Happens to Mortgage When You Separate

What Happens With a Mortgage When You Separate?

What Happens with a Mortgage When You Separate British Columbia

A separation is a major transition for a married couple, obviously. Beyond the emotional component there is a lot to consider, especially when you have a mortgage. What happens with a mortgage when you separate in British Columbia? The answer isn’t easy, but it also needn’t be as messy as some may think it is. The good news (considering) is that you have come upon this resource. Carloni Mortgage Brokers has vast experience in managing transitions associated with separations and divorces. You can either contact us right away at 250.493.9111 for a friendly conversation or read ahead first for more information.

Straightforward Answer to Concerns About Your Mortgage When Separating from Your Spouse in BC


Reconcilable Differences?

A separation is not a divorce, because there’s a chance that you could get back together. Research varies on the matter. Psychology Today reports that up to 15% of separated couples do. Meanwhile, other studies have shown that about 44% of married couples go through the process of separation and reconciliation, with half of them staying together in the longterm. It’s important to take stock of this before making any final decisions about what to do with your home. If unsure, consider seeing a marriage counselor before pulling the trigger on the options regarding your mortgage (below). Although, we know that the separation may also be a formality as you both get your respective ducks in a row, mortgage decisions included. Some may call this advice overstepping, but if you ask any one of our clients about how much we care, you’ll learn that our relationship with clients doesn’t end with the closing of a mortgage. When we say that our clients become a part of the Carloni family, we mean it. As a result, we want you to consider everything before making a rash decision – reconcilable differences or otherwise.

What Are Your Mortgage Options?

Sell the Home and Share the Profits

The way property values have been moving in BC, there could be a positive found amidst the mire of a separation, as you may both be able to come out on top financially. Positive financial conclusions for both sides certainly makes the split more amicable. That being said, there may be a mortgage termination fee and other considerations connected to your mortgage term, so you will need to go through the contract with a fine-toothed comb (more on this below). .

Mortgage Transfer

You may come to an agreement where which one of you agrees to buy out the other’s share of a shared mortgage. This puts the property under a single name. As with the first consideration above, there may be a mortgage termination fee, or other barriers should the transfer be made to the individual with a less favorable financial standing.

Assumption Agreement

A mortgage assumption agreement allows one of you to assume the current principal balance, interest rate, repayment period and any other contractual terms of the mortgage. This option negates the need to terminate the mortgage (and avoid a termination fee) although both of your’ names will remain on the mortgage.

Other Considerations

There are a few additional nuances to consider. For instance, if your mortgage renewal is coming up, you may wait to see what will happen should there be a risk of it being declined. Or, you could end up getting significantly better terms (interest rate, etc.) on the renewal which could impact your decision regarding a transfer or assumption agreement. This leads us to the next and most important step.

Connect to a Broker

No matter the avenue you decide upon above, it’s clear that there are challenges involved with each. The process will go much smoother when you work with a mortgage broker. For one, you have enough on your plate as is, and the last thing you need to do is deal with bankers, lenders, insurers, lawyers, and other agents. A broker who specializes in separation mortgage management takes on all of the heavy lifting so that you can focus on the other more personal challenges of what you’re going through. Secondly, a broker will help you make a more informed choice about the options laid out above. Amidst all that you two are dealing with right now, it’s nice to have a helping hand. Reach out via the contacts provided below.


Call BC’s Separation Mortgage Specialist

CALL: 250.493.9111

EMAIL: hello@carlonimortgages.com