We enter into relationships with the best of intentions, oftentimes seeing ourselves still in conjunction years down the line. As a result, we start acquiring assets jointly. Buying a home is the largest investment two people can make cooperatively. It is, therefore, no surprise that after a break up getting one person off the mortgage is a big deal that sometimes results in the court getting involved.
So How Do You Get an Ex Off Your Mortgage?
- Ensure your relationship has truly ended: Getting an ex off your mortgage is not a simple proceeding, therefore, ensure that the relationship is over and done before making this move.
- Plan with your ex what they want in terms of getting their monetary investment back: This can be done by negotiating a legally binding separation agreement. If your ex is agreeable to your terms and conditions fine, if not, you may need to employ the guidance of a lawyer to draft up an agreement and splitting the property value fairly.
- Keep or Sell? It now has to be decided between the two of you if either one wants to keep the house or if you want to sell it. If you both decide it best to sell, then use the released equity (Equity is the difference between what you owe on your mortgage and what your home is currently worth) to pay off joint debts and divide the rest between you.
- Deciding to keep: If one decides to keep the house, in countries like Canada and the USA you will need to prove that you are qualified to pay the mortgage on your own. This would require speaking to your current or another mortgage company /bank of your choice to take over the mortgage and providing the relevant documentation as requested.
- Buy out the leaving partner: If one person qualifies for a mortgage and decides to keep the house, that person will now need to decide if they want to buy out the ex. This can be part of the agreement in the refinance contract. So the bank/mortgage company will apply enough money to the mortgage that will allow for a buy-out. Again, check with your local mortgage company in the country you are in to confirm if this works the same there.
- Release of covenant. In cases where there is no payout based on the value of the house as against the amount owing to the bank/mortgage company, the person leaving may require what is known as release of the covenant (A release of covenant relinquishes the obligation between parties involved in this covenant). This is important because if your ex’s name remains on the mortgage they can be held financially responsible for that property should for example you are not able to pay the mortgage or no longer occupies the property. This can affect their credit score and prevent them from acquiring the property of their own later on. While this may seem like a good revenge tactic on your side, it’s not a safe road to go down. It is therefore strongly recommended that a release of covenant be given to your ex. In fact, without this, they can even claim ownership to your own later on.
How Do You Get Your Ex Off The Mortgage?
While the breakup may be difficult and even stressful, having to think about where to start in getting your ex off the mortgage should not be as exhausting.
If you are in a relationship and living in some parts of North America, you may want to consider creating a separation agreement. As per Canada.ca, a separation agreement is a legal contract between a couple. It is a written record of how a couple has settled issues related to their separation. This is regarded as a faster and less expensive way to settle issues than going to court. What is included in the agreement will depend on your personal circumstances such as what you own together and separately and if children are a part of the union. If you are married, you may also need to share the debts you owe.
It’s a good idea to act quickly to divide your finances. In some countries, provinces, and territories, if you wait too long to make a claim after your separation or divorce, you may lose your right to your share of the property. Usually, the property stays with the person who bought it. However, if your ex contributed to the buying process and assisted in taking care of the property, they do have a right to part of that property. If you do not agree, you may have to go to court.
If you are looking to settle out of court a separation agreement is the best option.
Creating a Separation agreement
As mentioned above, a separation agreement is a legal written record of how you both settled issues related to your separation. This is usually a faster and less expensive way to settle your issues out of court. Confirm if this is done in your region or country as it may save you both time and money.
A separation agreement may include:
- Your living arrangements
- How you have both decided to divide property
- How you will both cover any debt incurred while together
- If spousal support will be paid – this will be based on if you were married, or on the length of time you were living together if you were in a common-law union.
- Child support payments (where applicable)
- Custody of children (where applicable)
- Role both parents will play in the children’s life (where applicable)
You can prepare a separation agreement on your own, or get a lawyer to prepare one for you. It is recommended that each partner speaks to a lawyer before signing this agreement to ensure that you both understand all the agreements listed and will not have any regrets later down the road. Again, this is something that may not be available in some countries, thus it is advisable to check your country’s revenue department to find out.
Get Your Ex Off The Mortgage
Below are the simpler options to getting your ex off the mortgage:
- Sell the house – If it is that your ex has money in the house then it is advisable that you both agree to end the mortgage contract by selling the property and paying off the lender, along with taking care of any transaction costs that may incur. What is left should then be divided between the two.
- Buy out your ex – If possible and where you have the money to do so, buy out your ex. To do this, have a comparative market analysis done to determine the property value. Next, all the outstanding balances of all liens on the property should be subtracted from the actual market value, meaning the amount owning to your bank or mortgage company should be subtracted from the property value. This will leave the equity (what is left after all the outstanding balances of all liens on the property is subtracted from the actual market value). For example, if the property values $400,000 and the remaining balance to the bank is 300,000, that $300,000 is subtracted from the $400,000 leaving $100,000. From this $100,000 property taxes and a realtor’s fee will be subtracted. What is left after all these calculations are done is what would then be split down the middle between you and your ex. You will then pay your ex this amount out of pocket – since you will not actually be selling the property. Thus, a buyout would go through a similar calculation as if the house was being sold. Ensure that the proper documentation is drawn up and signed and that a lawyer is involved. This will be your security, later on, should your ex decide to be vindictive and claim non-receipt.
- Have your ex sign over the mortgage to you. A friend of mine explained to me that he was on his ex’s mortgage because her credit score was not good enough at the time she purchased her house and she needed his credit to boost her chances. After they broke up and he got married, he could not purchase his own home until he was off that mortgage. Since he had no money invested in his ex’s property and was more or less helping her out, he then had to get his name off her mortgage. For this, his ex employed the services of a lawyer who ruled up the papers and he was paid $1 by his ex to show that she actually purchased his portion of the property back from him. All papers were signed giving her full ownership of her property.
- Speak to a lawyer. If there is any confusion regarding removing your ex from your mortgage, it is best to speak to a lawyer to gain clarity on what to do as each country may have different recommendations.
Advantage of Removing Your Ex From Your Mortgage
There are some advantages to no longer having your ex on your mortgage. Some of these are:
No attachment or reason to hold on to you.
Sometimes your ex may see the fact that they are still on your mortgage as a reason to hold on to you. Taking them off shows finality and therefore should be done as soon as you are both sure you no longer want to be together. However, this is a big step that may require a lawyer and so should not be done before finality.
No hassle from your new partner on why you still have a joint property with your ex.
Remember that saying ‘happy wife, happy life’? Well, no partner wants to live in a house knowing it is part-owned by your ex. This would lead to endless arguments and endless nagging, not to mention you having to make the couch your best friend night after night! If you want a peaceful life, then getting your ex off your mortgage, especially if you are with someone new is a definite plus.
Ex is free to move on with their life, purchasing their own property.
While getting your ex off the mortgage works in your favor, this also works in their favor as they are now able to be free to happy for their own loans and mortgages. Having their names tied to another mortgage will prevent banks or mortgage companies from issuing them a loan. This will work against them especially if you have not been making your payments as scheduled.
You can build your own credit score
Having your name only on your mortgage and keeping up with your payments will afford you the advantage of building your credit score and ability to access loans as an individual.
Ex has to respect your space.
Having their name on the Mortgage can mean your ex feels a sense of ownership and entitlement. This can make them feel they have a right to either live in the house despite the breakup or see them dropping by whenever they feel the desire to, even though you may have moved on and lived with someone else. Taking their name off the mortgage means they no longer have that sense of entitlement, thus affording you your privacy.
Peace of Mind.
Knowing that you are the sole owner of the home you live in and can use it to your advantage is great peace of mind. If you have children or close family members, this property can be willed out to them as you see fit.