Divorce is tough. It’s messy, emotional, and the last thing you want to deal with is losing your home on top of it all. The matrimonial home isn’t just bricks and mortar—it’s where you’ve built memories, where your kids feel safe, and where you need some peace during a time of turmoil. So, let’s talk about how to keep the matrimonial home after the dust settles on your divorce. It’s not always easy, but it’s possible with the right strategy and a solid plan.
1. How to Keep The Matrimonial Home: Know the Value of Your Home
You need to know exactly what you’re dealing with. Real Estate values in Ontario have exploded exponentially, and your home is likely worth much, much more than what you paid for it. Get an actual home appraisal—don’t just rely on your gut or Zillow (seriously). If you’re going to keep the house, you need a clear idea of what it’s worth. Don’t let emotions cloud your financial decisions. This is about numbers.
2. Buy Out Your Spouse
Once you know the value of the home, the next step is figuring out how to buy out your ex’s share. Basically that will mean negotiating an “Offer to Purchase and Sale” (as part of your Separation Agreement,) just like you when you bight the home, except this time it is for your ex’s share of the home.
For most people this will mean qualifying for a new mortgage, liquidating other assets, or getting creative with the financials. It doesn’t have to be cash on hand, but you will need to make sure they are paid out their fair share of the home.
3. Can You Afford It?
How to keep the matrimonial home may not actually be the first question you should ask yourself. Be honest with yourself—can you actually afford to keep the home? The increased mortgage, taxes, utilities, and repairs don’t stop just because your relationship did. Sit down and do the math. If it looks too tight, it’s okay to admit it. But if you can afford it, then we start strategizing.
4. Refinance the Mortgage
Here’s the deal: If you’re going to keep the house, you’ll likely need to refinance it under your name alone. This will mean taking on the existing mortgage as well as paying out your spouse’s share of the home’s equity. That means you’ll have to qualify for the new mortgage based on your income and financial situation. It’s a biggie, but if you’re determined to stay put, refinancing is your way forward.
5. Find a Co-Applicant
Often, keeping the home or not comes down to qualifying for a mortgage, wh9ch is challenging for most people in today’s market, little lone when you are facing a divorce. If your income is too low, or your credit is not the best, consider asking a friend or relative to coming onto tile title with you. They will need to have good credit, little debt and a good income, but many times, this can be just enough to tip the new mortgage your direction.
6. Negotiate Other Assets
Maybe you really, really want the house, but buying them out seems impossible. You could negotiate other assets in the split. Trade something valuable, like your share of a pension, RRSPs or other investments in exchange for a greater share of the home. Creative divorce professionals will be able to help you negotiate this into your Separation.
7. Consider a reverse mortgage (Divorce Mortgage)
A Divorce mortgage is a temporary, transitional equity loan that allows an individual to borrow up to 65% of your home’s equity, enabling you to delay the sale of your home and stay in your home for up to two years without making payments. It,s expensive, but it is creative, most notably, the fact that there are no payments during those 2 years and the funds can be disbursed to your ex spouse just after signing your separation agreement.
8. Consider a Co-Ownership Agreement
It’s unconventional, but in some cases, people agree to keep joint ownership of the house for a short while, (often 2 years or less), especially when kids are involved. This allows the kids to stay in the family home, while you and your ex split the costs. It’s not for everyone, but in the short term, it can be a good bridge solution. You will want to talk to a lawyer before you attempt this one.
9. Rent The Home from Your Ex Spouse
Some couples set up the matrimonial home as a kind of joint investment business and then one spouse rents the property from the business. Creatively this means that renting spouse will pay rent to the other spouse or the ex spouse gets a break on support payments.
This is not for everyone, but if it works, Ensure that your separation agreement explicitly outlines the terms of the rental. This contract should cover the rental amount, duration, and any obligations for mortgage payments and property maintenance. You don’t want informal arrangements turning into conflicts down the road.
10. Stay in the Real Estate Market, But Elsewhere
For some, its not so much the matrimonial home that is the attachment, but the need to stay in the real estate market. You don’t necessarily need to stay where you are – consider buying elsewhere.
Alternatively, if you want to still reside in your area, but can’t afford house prices there, consider renting locally and buying a investment property or cottage elsewhere. This investment could be rented out and potentially set up to pay for itself – keeping you in the market for a later date.
How to keep the matrimonial home or even keeping the house shouldn’t be about short-term emotions. It needs to make financial sense in the long run. Ask yourself: Will this home still serve your needs in five years? Ten years? Or is it time to let go and start fresh? Sometimes letting go is the smarter move.
Do not—I repeat, do NOT—go to court to fight over the house if you can avoid it. Typically the courts will simply order the home to be sold.
That’s where we come in. The Common Sense Divorce is here to help you navigate the legal and financial maze of keeping your home, without you needing to fight tooth and nail. Our unique Mediation Team includes the legal, mortgage, real estate agents and financial professionals to help you come up with creative but smart solutions that work for both of you.