Sarah’s Story
Separation and divorce are difficult enough without adding uncertainty about the family home.
For many couples, the home is their largest asset. When a relationship ends, one of the first financial questions is often whether the home needs to be sold. Sometimes selling is the right answer. Sometimes one person can remain in the home, which can also provide continuity for the children.
Sarah’s story is an example of how that can work.
What Sarah Wanted
Sarah and her partner had decided to separate. Their separation was relatively straightforward, and they were working through the financial details themselves rather than through a lengthy legal process.
Sarah wanted to remain in the family home. Before making any final decisions, we needed to determine whether she could qualify for the mortgage on her own, including the financial obligations arising from the separation.
What We Discovered
We started with the numbers.
Sarah qualified for approximately $500,000 in mortgage financing. She needed about $450,000 to pay out the existing mortgage, complete the equity payout to her former partner, clear some debt accumulated during the separation, and leave herself with a modest emergency reserve.
There was also child support to consider. Because child support is an ongoing financial obligation, it needed to be included when calculating how much Sarah could qualify for. Spousal support had been declined, so there was no spousal support payment to include.
Because Sarah and her former partner were managing the separation themselves, we also needed documentation confirming the agreed division of assets and the child support arrangements. Once those details were documented, we had a clear picture to work from.
What Sarah Chose
Sarah refinanced the home into her name.
The new mortgage paid out the existing mortgage and provided the funds required for her former partner’s share of the equity. We were also able to include the debt associated with the separation and create a small emergency reserve.
Most importantly, we structured the mortgage based on Sarah’s financial circumstances today, including her child support obligation, rather than relying on what her finances may look like several years from now.
What It Gave Her
Sarah was able to remain in her home without stretching beyond what she could reasonably afford.
She also came out of the separation with a clearer financial structure. Rather than carrying the mortgage, separation related debt and equity payout separately, those pieces were addressed as part of one plan.
Over time, her circumstances will change. Once her children are older and child support is no longer an obligation, Sarah plans to direct more money toward the mortgage and pay it down more aggressively.
The larger lesson from Sarah’s story is simple. Separation does not automatically mean selling the family home.
The starting point is understanding the numbers. How much equity is available? What does each person qualify for independently? What support payments need to be considered? How much is required for an equity payout? And, most importantly, does keeping the home make financial sense?
Those answers can help determine whether one person keeps the home, the mortgage is restructured, or selling is the better choice.
A separation has enough uncertainty. The mortgage does not need to be one of them. If you know someone in the early stages of separation and need answers, please ask them to call me, we are happy to help.
