Free Canadian Mortgage Tool
Spousal Buyout Calculator (Canada) — Divorce & Separation
A spousal buyout mortgage lets one partner keep the family home by refinancing it and paying the other partner their share of the equity. Enter the home's value, the mortgage balance and the split from your separation agreement to see each side's share, the cheque the departing spouse receives, and the new mortgage and payment the staying spouse carries. Standard refinances stop at 80% of value; the spousal buyout program allows up to 95% when the agreement is final.
Short answer
How does a spousal buyout mortgage work in Canada?
A spousal buyout lets one partner refinance the home to pay out the other's share of the equity during a separation or divorce. Under the standard program you can borrow up to 95% of the home's value rather than the usual 80% refinance limit, provided the funds are used strictly to settle the matrimonial split and buy out the other party. Lenders require a signed separation agreement setting out the equity division and who keeps the property.
The home and the split
What it would appraise at now.
Everything secured against the home that gets cleared.
The split comes from your separation agreement and your lawyers — this tool only does the arithmetic.
Cards, lines of credit and loans being paid off.
Penalty, legal and appraisal costs.
Cheque to the departing spouse
$250,000
Conventional route — under the 80% loan-to-value ceiling.
Stays in the home
$250,000
50% of the equity, kept as equity in the home.
New mortgage
$655,000
72.8% of the home's value.
- Net equity to split
- $500,000
- Room left under 80% (conventional)
- $65,000
- Room left under 95% (insured buyout)
- $200,000
- Estimated monthly payment
- $3,732
Results are estimates for general guidance only and do not constitute an offer of credit. Actual figures depend on lender policy, credit history, and verified documentation. Call (604) 780-5173 for exact numbers.
Key takeaways
- Net equity is the home's current appraised value minus everything secured against it.
- A normal refinance caps out at 80% of the home's value; the insured spousal buyout program allows up to 95%.
- The buyout must be set out in a signed, final separation agreement — lenders will read it.
- Only the buyout of the matrimonial home (and debts named in the agreement) can be financed through the program.
- The staying spouse must qualify for the whole new mortgage on their own income.
- Breaking the existing mortgage early usually triggers a penalty, which can often be rolled into the new mortgage.
How a spousal buyout works
One partner keeps the home and refinances it in their own name. The new mortgage pays off the existing balance and pays the departing partner their share of the equity. Title is transferred at the same time, so the departing partner comes off both the title and the mortgage.
The separation agreement drives everything: the percentage split, any deductions taken before the split, joint debts being cleared and any equalization payment. This calculator only does the arithmetic on what the two of you and your lawyers have already decided.
The 95% spousal buyout program
Ordinary refinances are limited to 80% of the property's value. Canada's mortgage insurers make an exception for a matrimonial home being bought out, allowing financing up to 95% of value on a purchase-price basis, as long as the separation agreement is final and the payment goes to settling the marital property.
The exception is narrow. Only the buyout amount and the debts named in the agreement can be included; general debt consolidation or cash-out beyond the agreement is not eligible.
Qualifying on one income
The staying spouse has to carry the whole mortgage alone, and pass the stress test at the greater of the contract rate plus two percent or 5.25%. Child support and spousal support can help or hurt: support received may be usable as income when it's court-ordered and documented, while support paid is generally treated as a liability.
Run the numbers before agreeing on a split. If the payment doesn't fit the ratios, options include a longer amortization, a smaller buyout, clearing other debts first, or adding a co-signer.
Costs to plan for
Expect an appraisal, legal fees for the transfer and the new mortgage, a possible prepayment penalty on the existing mortgage and, above 80% of value, mortgage default insurance. Most of these can be rolled into the new mortgage if there's room under the ceiling.
Timing matters too. If the existing mortgage is close to renewal, waiting until maturity can avoid the penalty entirely.
Worked example
Worked example: $900,000 home, 50/50 split
| Home value | $900,000 |
|---|---|
| Mortgage balance | $400,000 |
| Net equity | $500,000 |
| Departing spouse's 50% share | $250,000 |
| Legal, appraisal and penalty rolled in | $5,000 |
| New mortgage | $655,000 |
| Loan-to-value | 72.8% |
At 72.8% of value the buyout fits inside the ordinary 80% refinance ceiling, so no default insurance is needed. Above 80%, the same buyout would need the insured spousal buyout program.
Frequently asked questions
How is a spousal buyout amount calculated?
Take the home's current value, subtract the mortgage balance and any deductions your agreement calls for, then apply the percentage split in the agreement. The result is the amount the departing spouse receives.
Can I borrow up to 95% for a spousal buyout?
Yes. Canada's insurers make an exception to the usual 80% refinance limit for a matrimonial home buyout, up to 95% of value, provided the separation agreement is final and the funds settle the marital property.
Do I need a separation agreement first?
Yes. Lenders require a signed, final agreement setting out the split and any debts being paid, before the buyout mortgage can be approved.
Can joint debts be paid out in a spousal buyout?
Debts specifically named in the separation agreement can usually be included. General debt consolidation beyond the agreement is not eligible for the program.
Will I be penalised for breaking the current mortgage?
Usually yes, unless you're at renewal. Variable mortgages charge three months' interest; fixed mortgages charge the greater of three months' interest or the interest rate differential.
Can I qualify on my own income?
You have to. The staying spouse must qualify for the full new mortgage alone, including the stress test. Documented support payments received or paid are factored in.
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