Mortgage Financing Through A Separation Or Divorce

Tanya Toye • July 23, 2025

With the latest stats claiming that about half of marriages end in divorce and with around three-quarters of Canadians being homeowners, it’s important to know how to handle your mortgage if you decide to separate. Here’s a quick list of things to consider.


Keep making your payments.


A mortgage is a legally binding contract between you and the lender. It doesn’t take marriage into account. If your name appears on the mortgage, you're responsible for making sure the regular payments are made. A marital breakdown does not give you an excuse not to make your mortgage payments.


If, during your marriage, you've relied on your spouse to make the mortgage payments and you aren’t certain payments are being made after separating, it's in your best interest to contact the lender directly to verify your mortgage is being paid. If payments aren't being made, it could affect your credit score or worse; the lender could start foreclosure proceedings.


There is always a financial cost to break your mortgage.


When working through how to split your finances, you decided to either refinance your mortgage, remove someone from the title, or sell the property, keep in mind that you will incur legal costs.


If you’re in the middle of a term, the penalty for breaking your mortgage might be significant, especially if you have a fixed-rate mortgage. It’s certainly worth contacting your mortgage lender directly to verify the cost of breaking your mortgage. Having that information accessible when writing out your separation agreement will provide increased clarity.


Listing your marital status as separated or divorced.


When completing a mortgage application for securing new mortgage financing, when you list your marital status as separated or divorced, you can expect that a lender will want to see your legal separation agreement or your divorce papers. The lender wants to make sure you aren’t responsible for support payments. So if you haven’t finalized the paperwork, expect delays in securing mortgage financing. 


It could be harder to qualify for a new mortgage.


With the separation of assets also comes the separation of incomes. If you qualified for your existing mortgage on a double income, you might find it hard to maintain the same quality of lifestyle post-separation.


This is where careful planning comes in. Working closely with your independent mortgage professional will ensure you understand exactly where you stand. You’ll want to put together a plan for how to handle the mortgage on the matrimonial home.


Purchasing the matrimonial home from your ex.


There are special considerations given to people going through a separation to buy out the matrimonial home. Instead of looking at the transaction like a refinance where you can only borrow up to 80% of the property’s value, lenders will consider one spouse buying out the other up to a 95% loan to value ratio. This comes in handy when dividing assets and liabilities.


Navigating the ins and outs of mortgage financing isn’t something you have to do alone. If you're going through a separation and you’d like to discuss all your mortgage options, please connect anytime. It would be a pleasure to walk you through the process.


Tanya Toye

Mortgage Broker

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Buying an Investment Property for Your Kids’ Post-Secondary Years

By Tanya Toye • July 23, 2025
Sending your children off to university or college is an exciting milestone, but it can also come with serious financial decisions, especially when it comes to housing. While renting a unit near campus may seem like the easiest route, many parents understand the long-term value of purchasing an investment property instead. Here’s why buying may be a smarter choice than renting: 1. Build equity instead of paying rent. When you rent, those monthly payments are gone for good. But with a mortgage, every payment helps build equity in an appreciating asset. Rental costs are also high across the country. If your child is attending a four-year program, that’s potentially 48 rent payments you could be putting toward your own investment instead. 2. Offset costs with rental income. In many university towns, rental demand is high. If your child doesn’t need the whole unit, you can rent out extra bedrooms or even a basement suite to other students. This rental income can help offset your mortgage payments, condo fees and utilities – sometimes even covering the costs entirely. Plus, your kid will be living there to oversee all tenants, offering an added layer of protection. 3. Tax advantages. Unlike your primary residence, a rental property may come with tax-deductible expenses such as mortgage interest, property taxes, maintenance and insurance. Depending on your situation, you may also be able to claim depreciation or capital cost allowance. (It’s best to speak with a tax professional to understand your eligibility.) 4. Investment opportunity. With rising real estate prices, this could be an opportunity to secure property in a city your child may want to live post graduation. It gives them a potential future home – and offers you a long-term investment in a high-demand rental market. 5. Greater control and security. Owning the property means you don’t have to worry about last-minute lease changes, strict landlord rules or rising rents. It also gives your child a stable, secure environment for their studies. If you're considering this strategy, I’d be happy to weigh your options and determine if this fits within your financial goals. I can help you explore financing options, evaluate cashflow potential and ensure you're set up for success – both now and after graduation. Let’s talk about whether this could be the right move for your family: 604-788-8693 | tanya@tanyatoye.ca

Getting A Second Mortgage

By Tanya Toye • July 16, 2025
If you're not all that familiar with the ins and outs of mortgage financing, the term "second mortgage" might cause a bit of confusion. Many people incorrectly assume that a second mortgage is arranged when your first term is up for renewal or when you sell your first home. They think that the next mortgage you get is your "second mortgage." This is not the case. A second mortgage is an additional mortgage on a single property, not the second mortgage you get in your lifetime. When you borrow money to buy a house, your lawyer or notary will register your mortgage on the property title in what is called first position. This means that your mortgage lender has the first claim against the sale proceeds if you sell your property. If you happen to default on your mortgage, this is the security the lender has in repossessing your property. A second mortgage falls in behind the first mortgage on your property title. When you sell your property, the lawyers will use the sale proceeds to pay off your mortgages in sequence, the first position mortgage is paid out first, and the second mortgage is paid out second. After both mortgages are paid off completely, you get the remaining equity. When you secure a second mortgage, you continue making payments on your first mortgage as per your mortgage agreement. You must also then fulfill the terms of the second mortgage. So why would you want a second mortgage? Well, a second mortgage comes in handy when you're looking to access some of your home equity, but you either have excellent terms on your first mortgage that you don't want to break, or you’d incur a huge penalty to break your first mortgage. Instead of refinancing the first mortgage, a second mortgage can be a better option. A second mortgage is often used as a short-term debt consolidation tool to help provide you with better cash flow. If you’ve accumulated a considerable amount of high-interest unsecured debt, and you have equity in your home, you can secure a second mortgage to lower your overall cost of borrowing. If you'd like to know more about how a second mortgage works, or if you'd like to discuss anything related to mortgage financing, please connect anytime!