Separation can bring a whirlwind of emotional and financial challenges, especially when it comes to jointly owned property. One of the biggest questions many Ontarians face is: What happens to the mortgage? Whether you’re staying in the home, buying out your partner, or looking to adjust your monthly payments, refinancing may be the key to moving forward with financial clarity.
In this guide, we’ll walk through what refinancing after separation involves, what your options are, and how The Local Broker can help you navigate the process with confidence.
Why Refinance After Separation?
There are several reasons why refinancing may be the right move following a separation:
- To remove one party from the mortgage and title
- To buy out the other party’s share of the home
- To secure a more affordable payment structure
- To tap into equity for legal costs or starting fresh elsewhere
If the mortgage was jointly held and one partner wants to keep the home, refinancing is typically required to shift the mortgage (and ownership) into a single name.
What Lenders Look For
Just like with any mortgage, lenders want to ensure the remaining borrower can afford the payments on their own. When refinancing after separation, they’ll assess:
- Your income (including support payments, if applicable)
- Your credit score
- Debt-to-income ratio
- Equity in the home
- Any legal agreements related to the separation
In Ontario, it’s common for lenders to request a finalized Separation Agreement to confirm terms like property division, spousal support, and custody. If your agreement is still in progress, some lenders may offer conditional approval, but having a signed agreement makes things smoother.
Using Home Equity to Buy Out Your Ex
One of the most common reasons for refinancing after separation is to buy out your former partner’s share of the home. Here’s how that usually works:
- The home is appraised to determine its current value.
- Any outstanding mortgage balance is subtracted.
- The remaining equity is split according to the terms in your separation agreement.
- A refinance is arranged to pay out your partner and assume the mortgage independently.
Let’s say your home is worth $600,000, and you owe $300,000. If your agreement is to split the equity 50/50, you’d need $150,000 to buy out your partner. You may be able to refinance up to 80% of the home’s appraised value to make this happen.
For more details, check out our article: Getting a Mortgage While in a Consumer Proposal — many of the same affordability considerations apply.
Can You Qualify on a Single Income?
If you relied on two incomes to qualify for the original mortgage, refinancing alone may feel daunting. However, lenders will consider your full financial picture, including:
- Employment income
- Child or spousal support (with a formal agreement)
- Additional income (rental, self-employment, etc.)
- Your debt obligations
You may be able to extend your amortization or switch lenders to secure better terms and increase affordability. A mortgage broker can help you compare options across multiple lenders, including some that specialize in post-separation financing.
What If You Can’t Refinance?
If refinancing isn’t possible on your own, there are still paths forward:
- Sell the home and divide the proceeds
- Apply with a co-signer (such as a parent)
- Wait and rebuild your credit or income
- Explore spousal transfer or assumption, if allowed by the lender
Remember, not all separation situations are the same. The right solution will depend on your finances, the legal agreement, and your long-term goals.
Work With a Mortgage Broker Who Understands Separation
Refinancing after separation can be emotionally draining, especially when there’s pressure to make quick decisions. That’s where a mortgage broker comes in.
At The Local Broker, we help clients across Ontario — including Guelph, Fergus, Elora, and beyond — secure mortgage solutions that reflect their new reality. We can:
- Explain your options clearly and confidentially
- Help you compare lenders and find the right fit
- Walk you through the documentation process
- Connect you with flexible solutions that banks might overlook
Whether you’re ready to refinance or just want to explore your options, start your application now or reach out to us for support.
Final Thoughts
Separation is never easy, but you don’t have to figure it all out alone. Refinancing your mortgage after a separation in Ontario is possible — and often the first step toward a stable financial future.
Make informed decisions, get the right advice, and take one step at a time. When you’re ready, contact us to talk about your next move.
