This isn’t something I ever like dealing with. In fact I hate it. When clients are going through a divorce, they are not at their best. There are emotions running through them that they’ve never experienced before, and judgements may be affected. That’s the line most lawyers will use when explaining why a prenuptial agreement makes sense, because the couple can divide things with clear heads before a breakdown. That makes sense.
When you are going through this sort of thing though, you are relying on information the experts are giving you, and one thing I have come across recently is the selling of the matrimonial home.
My client was going through a divorce, and had been referred to me by a friend. She had her lawyer, she had her real-estate agent, and she had her bank. She had gone to her bank and told them the situation, gone to her lawyer as well, and her real estate agent. Everyone told her the same thing: if she wanted to stay in the house, she would have to pay her husband for his share. She was told by everyone that she could borrow against the equity of the home to do this. Unfortunately, the house was worth $400,000, and they still had $340,000 owing. Her bank had told her that they would only be able to lend up to a maximum of 80% of the home on a refinance under the new mortgage rules. She was already at 85%, so she was out of luck. She checked with her lawyer as well, and he said the same thing.
So, she came to me to see about a second mortgage at a private lender at a higher rate, just so she could stay in her home.
The problem was, she wasn’t getting the right information from anyone.
On an exceptional basis, certain lenders -- along with both CMHC and Genworth -- have been considering marital split payouts up to 95% Loan-To-Value as of late, not the 80% commonly thought.
With this in mind, we were able to refinance to $380,000 -- the full 95% -- getting her an extra $40,000 to pay out her husband. And the kicker? We didn’t have to go to a private or subprime lender. We did it right through her bank. It’s just that people didn’t know all the rules, and were too quick to just brush her off.
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