Challenges and Solution Divorce Families and Their Debts
We have 16 plus years on mortgage planning on our team. We are an educator for clients to assist them in ensuring they are achieving their financial goals.
Top 4 issues for divorce families:
#1 Issue, I see often clients ruin their credit in the process of closing creditor accounts and being late on joint mortgage payments waiting for the dissolution. We work with them to ensure they will meet mortgage standards for qualifying: rule of 2 trade lines, 2 year history, $2500 minimum limits and NO late mortgage payments.
#2 Issue, the spouse with the big spousal/child support payment now can’t get a mortgage as the payments are considered large liabilities.
#3 Issue, don’t have enough money for a down payment to buy another place after paying out debts.
#4 Issue, don’t have enough money to pay the legal fees, so get stuck in the cycle of not getting proper legal advice.
With divorce rates well over 40% in Canada, it is only a matter of time before they will need your help with a solution. I work with a few lenders that are able to make mortgage financing easier for these clients. Here are a few ways in which we can help:
- Flex Down Mortgage Program – There is a program offered by lenders that allow the client to borrow the down payment.
- Deduct Support or Alimony from Gross income – lenders allow deducting the alimony or support payments from gross income, rather than showing the payment under liabilities. This will reduce the TDS average by 10% or…an average of buying a $250k condo vs. a $400k home to raise the children.
- Spousal buyout program – This is a program offered by many lenders to allow one source to buy out the other spouse and take over the mortgage and property up to 95% of the LTV while still processing it as a refinance.
- Cash Back mortgage Option – This is a product available through the lenders to offer them a mortgage with a Cash Back option to assist with legal fees and debt payments.
The first step for qualifying is to ensure you have a separation agreement started. It costs nothing for a consultation and in most cost you nothing to have a licensed mortgage planner work with you. We are paid by the banks and the lenders! Please take a moment to pick up the phone and see how we can help.