Anyone who has been there can testify to this, and there are many of them. The breakup causes an impoverishment of the former spouses, especially when it is a question of a divorce, even more when there is the presence of a child.
There are has always been so. Today, however, people who separate face a new wall that makes the experience worse, and not just a little: the inaccessibility of the real estate market.
Failing to to be able to prepare for it, it is better to be aware of it. It will avoid disappointment.
80% higher prices
Yet the news about exploding house prices is known to everyone, but we don't fully realize it until we don't. is not struggling with the latter; you don't realize that what could be narrowly accomplished together will be totally out of reach solo.
“Separated people walk out of my office in tears, unable to find funding “, reports the notary Stéphanie Bourassa, of Montreal.
Broken couples consult the lawyer to finalize a divorce, sell a house or revise wills. Unable to buy something back, ex-spouses sometimes resolve to live together in their house, for better or for worse.
Over the past five years, the price of single-family homes has jumped 80% in Quebec. Sure, these increases in value portend good profit, but they also make it impossible for the exes to buy each other's share.
With the proceeds of the sale, each of the spouses can leave on their own with what it takes to make a down payment on a new property, but “the problem, neither has the ability to buy back in the same neighborhood,” observes actuary Ryan La Haye, mortgage broker at Planiprêt.
It's a lesser evil for couples without offspring, but it's less fun when you have to uproot the child from his school and find two new properties within reasonable distance, in accessible neighborhoods large enough to provide shared custody.
And again, this may be the ideal scenario, because it is increasingly common for neither of the two exes to be strong enough to become a landlord again, despite the resale of a first property.
Couples who have not lasted long are more at risk of finding themselves in this situation. The value of their house has appreciated, but little capital has been repaid during the cohabitation. With all the costs involved in the separation, including the penalty for prepayment of the mortgage, there is not much left of the profits generated by the resale.
The effect of interest rates
What is most surprising, without a doubt, is the effect of the rise in interest rates. Ex-spouses are simply denied funding.
“The immediate solution is to rent an apartment, short or long term,” says financial planner Luc Dubé, for whom this type of situation is becoming more and more familiar.
< p>Only since January, fixed rates on five-year mortgages have doubled, from 2.5% to 5%, at best.
The lower variable rate, climbs at high speed, and we don't know where the ascent will end. The impact on new homeowners' debt servicing, monthly payments, is immense.
Certainly, rising borrowing costs could depress prices. But it will take some time, and we can't assume that affordability will improve significantly.
Mortgage broker Brian La Haye is philosophical: will have more interest in working on maintaining their relationship rather than thinking about separation at the first difficulty. »
If these attempts turn out to be unsuccessful, you must at least revise your expectations: it will be a big hassle to relocate.
Separated couples can use the HBP again, provided that the amounts withdrawn from the RRSP in a first HBP have been repaid. This is rarely the case before 15 years together.
Consult a mortgage broker, but be careful of risky solutions. Some variable rate mortgages may seem attractive, but often the borrower hasn't paid a penny of principal after the first five-year term. In a context where prices may fall, this is dangerous.
Leasing will prove to be the best option, at least for the transition, even if this choice may seem like a regression to you.
Katrine Johns has been a reporter on the news desk since 2013. Before that she wrote about young adolescence and family dynamics for Styles and was the legal affairs correspondent for the Metro desk. Before joining The Gal Post, Katrine Johns worked as a staff writer at the Village Voice and a freelancer for Newsday, The Wall Street Journal, GQ and Mirabella. To get in touch, contact me through my firstname.lastname@example.org 1-800-268-7128