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  • Joint Mortgage After Seperation

    My wife and I are negotiating on various options to come to terms on an equitable settlement on separation. We've been co-habitating for 11 years (married for 7)

    Option One:

    * Sell current home ($295,000) and split proceeds on sale 50/50 after joint debts paid (mortgage, LOC etc)

    * Split furniture

    * We would both rent separate apartments

    * She would fight all the way and go the legal route for Spousal support range 1400-1700 monthly for 10 years (There is a 70/20 difference in my salary as compared to hers - I've already had a lawyer perform a what if calculation and based on my salary that's the range I could expect if it went to court). She has a very different employment then mine with no benefits package such as pension or medical benefits). On her salary, very unlikely she would qualify for her own mortgage at this time.

    * There would be a pension equalization payout from me to her (value TBD but likely in the range $30-40,000)

    * She would also apply for splitting of my Canada Pension Benefits

    * Split my RRSPs with her (she has none)


    Option Two:

    * Sell current home and split proceeds on sale 50/50 after joint debts paid (mortgage, LOC etc)

    * Split furniture

    * We (joint mortgage) buy a "new" home that she would live in (approximate value 150,000 or <). After 5-7 years she applies for a 2nd mortgage to buy me out so that she gets clear title)

    * I pay spousal support $1000 for 10 years

    No pension payout or transfer of CPP benefits

    I keep my RRSPs

    I will rent (I intended to anyway) for the next couple of years, I may consider buying after that.

    Has anyone dealt with a similar circumstance where to avoid costs on one side, (and court costs and legal fees to boot), one party agreed to enter into a joint mortgage with the other? What are the pitfalls in doing so?

  • #2
    * We (joint mortgage) buy a "new" home that she would live in (approximate value 150,000 or <). After 5-7 years she applies for a 2nd mortgage to buy me out so that she gets clear title)
    _________________________

    I don't know a lot about the law, but the above stood out to me. Let's say she remarries prior to those 7 years. It would seem there should be a clause that her new husband would need to take over your portion of the mortgage and title.

    Will you or her be making the payment? If her, what happens if she gets sick or loses her job? What if she moves in with somebody else and rents that property?

    Do you build equity in her home if she sells it within those years so would you get a profit or she would get it all?

    Will she buy out the mortgage or buy the home so you get part of the appreciation? What if the house prices would depreciate greatly during those years and she couldn't get a mortgage?

    For me, that point left a lot of unknowns that I, personally, would not be comfortable with.

    I'm divorced but the judge is working on the financial separation still. It is my understanding that appropriate CPP points can be the partner's no matter what the decree says. Here's what Services Canada says:

    "On or after June 4, 1986
    If you signed an agreement on or after that date, even if it says you specifically gave up your right to split Canada Pension Plan pension credits, in most cases the Canada Pension Plan, as a third-party to the agreement, is not bound to its provisions and Canada Pension Plan can still split the pension credits."


    Hephzibah

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