There are a lot of reasons to buy a house with someone else. You could be:
- buying a family home with your boyfriend/girlfriend or husband/wife;
- co-signing for your grown son/daughter to assist them with their purchase;
- investing with a sibling or friend so that you can both get a foot on the property ladder.
Whatever your situation, it represents a significant investment and financial commitment for everyone involved. So what happens when you want or need to divide the asset of your house?
If you're familiar with the 80s film “War of the Roses”, it's about a couple that started out well; in the beginning they were happy and loved each other. Near the end of the movie, however, their relationship had turned ugly. So much so that one of them took a chainsaw to the house in order to split things down the middle. Thankfully, there are better ways of splitting up a jointly owned home, especially when one partner wants to keep it.
Some mortgage lenders offer an Equity Buyout Program that can assist one person in buying out the interest of the other owners of the home. The highlight of this solution is that it circumvents the rule for refinances of an 80% loan to value and treats the transaction like a brand new purchase, allowing up to 95% loan to value.
If you've built equity in the property, this program may provide the opportunity to include additional joint debt that is required to be paid out as part of the separation. This debt can sometimes be a hindrance in allowing everybody to go their own separate ways. It also allows one partner to buy out the other’s equity, thereby freeing the person that receives those funds to invest them elsewhere, perhaps in the purchase of a new property since they now have a down payment to do so.
Another major benefit of this program is that in the case of divorce it allows couples not to have to uproot their children from their existing home in the midst of an already difficult time. Provided the spouse who would like to retain the home qualifies, this program prevents them from being forced to sell the home, thereby avoiding the costs and stress associated with doing so.
At Auxilium, we have specialized knowledge of the Equity Buyout program and have assisted many clients in navigating through it! If you feel that you could benefit from this solution and would like to learn more, or you would simply like to run your scenario past us, start the process with us today. Call our team at 250-590-6520 (toll free at 1-855-590-6520) or fill out our contact form to choose the time that works best for you.
Originally posted February 2016, updated October 2021.
Auxilium Mortgage Corporation is based in Victoria, BC and works with clients locally and across Canada. The Auxilium team has over 100 years of combined financial experience and access to dozens of lenders to help you meet your goals.