Moving on and moving In

When considering buying a house after a marriage separation, there are several important factors to keep in mind. Here are some steps you can take:

Finalize Legal Proceedings:

Ensure that all legal proceedings related to your divorce are finalized. This includes not only the divorce itself but also any property settlement agreements.

However, while waiting for the divorce to be officially finalized, you can still proceed with purchasing a new home.

Assess Your Finances:

Understand how your divorce will impact your financial situation.

Consider factors such as alimony, child support, and any outstanding debts.

Determine how much you can afford for a new home based on your current financial standing.

Divide Your Finances:

If you’re purchasing a new home with a new partner, ensure that both of you are aware of each other’s financial situations.

Discuss how you’ll handle joint expenses, mortgage payments, and other financial responsibilities.

Show Your Payment History:

When applying for a mortgage, lenders will review your credit history and payment track record.

Make sure your payment history reflects responsible financial behavior.

Remember that legal advice is crucial during this process. Consult with a family lawyer to address any specific concerns related to your situation. While waiting for the divorce to be finalized, you can proceed with purchasing a new home without complicating matters with your new relationship.

In Ontario, divorcees may qualify for several home buyer programs that can assist them in purchasing a new home. Here are some programs and changes that could be relevant:

Home Buyer’s Program for the Recently Separated:

Recent changes to Canada’s Home Buyer’s Program allow those who have recently separated or divorced to participate, even if they lived in a home owned by their spouse within the preceding four-year period.

To qualify, you must have been living apart from your former spouse for at least 90 days and cannot be living in a home owned by a new spouse or partner at the time of the withdrawal.

The program allows for a tax-free withdrawal from your RRSP of up to $35,000, which must be repaid within 15 years. The recent Federal Budget has proposed raising the withdrawal amount to $60,000 and starting repayment by year 5 rather than year 2.

First-Time Home Buyers’ Tax Credit:

If you have not owned a home in your name or lived in a home owned by your spouse or common-law partner in the four years prior to the purchase, you may qualify for this tax credit.

The tax credit is a $5,000 non-refundable income tax credit amount on a qualifying home, which can result in up to $750 in federal tax relief2.

Spousal Buyout Programs:

If you’re looking to buy out your ex-partner’s share of the matrimonial home, there are spousal buyout programs available through certain lenders.

These programs can provide the necessary funds to pay out your spouse’s equity in the home, allowing you to retain ownership.

It’s important to consult with a financial advisor, a Mortgage Agent and a Real Estate lawyer to explore these options and determine which programs you may be eligible for based on your specific circumstances. They can provide guidance on the application process and help you understand the financial implications of each program.

I'm Steve Willson, a licenced Mortgage Agent Level 1 in Ontario. You can reach me through my website stevewillson.ca