Dealing with a house mortgage in the event of a divorce

Getting divorced? Here’s how to keep your home (Even with a mortgage)

Let’s start with some rather stark statistics so you understand that no one is immune from divorce. Divorce is omnipresent in our society; the sad reality is that nearly 67% of all couples who married after 1990 will divorce. Of those, 50% will divorce within 5 years. Whether living common-law or married, you will face the same challenges if you separate.

Even in a growing economy, it is often difficult and expensive to divorce or separate. No one wants to even imagine what it would be like during a recession or at a time like we are currently living through. If you are not in excellent financial health, a divorce or separation can be devastating. Having to sell the family home is often the result.

One of the major issues in a divorce is the family home. Any decision regarding it will be influenced by a number of factors, including the emotional attachment of family members to the property, proximity to your workplace, and the need to maintain a certain stability for your children.

The questions we usually ask ourselves in this situation are:

  • Will the house be kept by one of its current owners? Which one?
  • Do I have the means to keep the house and pay the mortgage alone?
  • Will the bank agree to grant a new mortgage on the house with only one of the owners as the borrower?

In this blog post, we will address the various options available to people going through a divorce.

Selling the house

When there is a divorce, selling the family home is sometimes the only viable option. This scenario is common when a single individual’s salary is not enough to refinance the property or take on the existing mortgage. If the property needs work and you can’t afford it, you could opt for a second mortgage. This would allow you to complete the work required to maximize the value of the property at the time of sale.

How can I keep my house after the divorce?

There are many ways to keep the family home after a divorce. Unless otherwise agreed, the person keeping the house will have to pay the other owner half of the equity and then take on the existing mortgage.

The equity in your home is calculated by subtracting the amount owed on your home (e.g. mortgage balance, home equity line of credit balance) from the market value. Here is an example of how to calculate the home equity:

House value: $500,000

(– minus) Mortgage balance: $300,000

(= equals) Home equity: $200,000

You would therefore have to give your ex-spouse $100,000, which is the available equity divided by 2. If you choose to refinance, the amount to be refinanced would be $400,000.

  1. Buy back your ex-spouse’s share with your savings

    If you have enough savings, you could simply give your ex-spouse their estimated amount of equity. You will still need authorization from the bank to assume the mortgage on your own and relieve your ex-spouse of their responsibility for the mortgage. The bank will ask you to resubmit all the required documents (T4, proof of employment, etc.) to obtain approval.

  2. Refinance with a bank (with or without a co-signer) in order to acquire 100% of the property

    You could opt for bank refinancing to acquire your ex-spouse’s share in the house. We are talking here about traditional bank mortgage financing. You will therefore need to qualify for a mortgage as if you were a new customer. If your salary is insufficient or if you have a bad credit rating, you could try with a co-borrower. A family member is often ideal.

  3. Refinance with a private lender in order to acquire 100% of the property

    If you have good equity in your property but your financial situation or credit rating does not allow you to refinance your mortgage with a bank, there is another option: a private mortgage. Since approval is based solely on the equity in your property, you avoid having to go through a difficult refinancing process.

    Such private mortgage loans are often for a short period. This is generally a 12 to 24-month transitional loan that enables you to stabilize your financial and family situation in order to benefit from more options later.

How can I apply for a mortgage loan?

Apply online via our website or call us at 1 (877) 220-7738, extension 1.

Why choose a private mortgage loan to acquire a property

How a private mortgage can help you buy a property when banks say no

Even though mortgage rates are at historic lows, accessing traditional mortgage loans with banks remains difficult for many borrowers. People are therefore looking for new financing options in order to acquire one or more properties. Whether it is for the purchase of a primary residence or for a short- or medium-term investment, taking out a mortgage with a private lender is becoming an attractive option for many.

1. Who should use a private loan to acquire a property?

If you are in no rush and have a good job, good income, great credit and enough borrowing capacity, then a private mortgage is not for you. You should look at traditional banks for a lower cost loan.

However, there are dozens of situations where private mortgage financing for home ownership is a good option. Here are a few:

  • you are self-employed but have been in business for less than two years;
  • you have to conclude a real estate transaction on short notice and cannot wait weeks for an answer from the bank;
  • you have recently immigrated to Canada and you have a 25% down payment but no credit history;
  • you are self-employed but your declared income in the past 2 years is too low to qualify for bank financing.

2. Why choose a private loan to acquire a property?

Financing a property with a private mortgage should always be considered a temporary solution as you move towards refinancing with a traditional bank. The average loan term is 6 to 36 months.

People opt for this solution for the following reasons:

  1. It’s much faster than a conventional bank. It can take several days for a conventional mortgage loan application to be approved. With us you can make an application in less than five minutes using our secure online form and get a same-day response.
  2. The approval process is so simple. No more endless paperwork and having to meet certain debt ratio criteria to qualify. The approval of our private loans is based primarily on the net capital available on the property.
  3. You will have access to flexible payment terms. Your ability to repay is essential to us. So that is why we offer payment terms that allow you to lower your monthly payments or even prepay the full interest on the loan.

3. What does it take to qualify?

a. The down payment

In order to acquire a property with a private mortgage, you must first have a down payment of at least 25% of the purchase price. For example, if you are buying a property for $200,000, the down payment required is $50,000. If you do not have a down payment but instead have other real estate assets, we can look at the possibility of using the available equity in these other properties to replace or reduce the required down payment. Our mortgage calculator can help you determine the maximum amount available to finance on your property.

b. The location of the property

In order to obtain approval for private mortgage financing, the property you wish to acquire must be located in an urban area of ​​more than 25,000 inhabitants. The regions we mainly serve are Greater Montreal, Quebec, Sherbrooke and Gatineau. If the property is not located in an urban area, we can still evaluate your application for financing, but with a lower loan-to-value ratio.

How can I apply for a mortgage loan?

Apply online via our website or call us at 1 (877) 220-7738, extension 1.

 

Is Refinancing A Private Mortgage With Another Private Lender Worth It? – Follow up

Refinancing a private mortgage: is switching lenders really worth it?

Our article Is refinancing a private mortgage loan with another private lender worth it? Aroused much interest. Several clients have contacted us claiming they had been solicited by other companies in order to refinance their private mortgage loan currently with Victoria Financial Inc. Following the discussions we had with these customers, we thought it was important to write a continuation of the article.

The cocktail of fees often between $ 7,000.00 to $ 15,000.00 is not the only factor to consider when considering a change of private lender. Here are other things to think about.

Does the private lender presented to me have a good reputation?

A good way to check is to do a short Google search with the name of the private lender, and then see if he has a good rating. In addition, testimonials available online on Google business, Facebook or LinkedIn can be viewed to find out the opinion of other customers.

Since when are they in business, and who are the administrators? You can get this information for free on the Registraire des entreprises.

Does the new lender offer the option to renew the loan when it is due?

It is important that you do not hit a wall at the end of your new private mortgage loan. You must therefore make sure that the deed of hypothec you are about to sign contains a clause regarding the renewal of the loan.

In conclusion, if the private lender does not offer a renewal, you will need to make sure that you have the funds available to repay the full amount when the loan expires.

The switch can be very expensive; here is a true story experienced by one of our customers.

Most recently, the loan of one of our clients was due. Despite the renewal offer he received, he did not contact us to discuss the options available to him.

A mortgage broker solicited him via mail to invite him to change private lenders. The new lender presented offered a lower interest rate, all of which sparked a tantalizing economy.

However, this lender required several fees that proved to be more expensive than those requested for a renewal with us.

Here is a comparison chart of the two options available to this client :

Current financing with Victoria Financial Financing offered by the new private lender
Loan amount $ 60,000.00 $ 80,000.00
Interest rate 15% 12%
Initial lending fees $ 1,250.00 (renewal) $ 6,500.00 (initial fees)
Brokerage fees Not applicable $ 3,500.00
Notary fees Not applicable $ 2,050.00 (mortgage, release and title insurance)
Monthly payments $ 750.00 $ 800.00
Total cost of interest $ 9,000.00 $ 9,600.00$
Total cost of the loan $ 10,250.00 $ 21,650.00
Cost of borrowing percentage 17.08% 27.06%

In summary, the client’s cost of borrowing went sky high at 27.06% and it cost him more than $12.000.00 in transitional fees to earn a residual amount of only $8,000.00$.

CAs you can see, the idea of a lower interest rate was tempting at first sight. However, when the client realized the magnitude of the fees once he was at the notary’s office, he was not at all excited by the idea!

On the other hand, he had already signed an agreement with the new private lender as well as with the broker. He was therefore bound to them without being able to go back. The cancellation of the financing contract would have cost him a cancellation fee representing brokerage fees, processing fees and notary fees totaling $ 12,050.00.

How can you make a more informed choice?

We always recommend that clients contact their original private lender. Unknowingly, customers sometimes have the option of obtaining an additional disbursement or to capitalize part of the interest in order to reduce their monthly payments. These options do not require the intervention of a notary, which helps minimize their costs.

In almost all cases, switching to a private lender is an option to avoid. The related costs are important and too often presented to the client at the last minute at the notary’s office.

If you have any questions regarding your mortgage renewal with Victoria Financial or if you would like to refinance your private mortgage with us, please contact us so that we can enlighten you.

You can fill a contact form via our website or call us at 1 (877) 220-7738, extension 1.

Should You Refinance Your Private Mortgage with Another Lender?

Is Refinancing A Private Mortgage With Another Private Lender Worth It?

Do you have a private mortgage loan with a private lender that expires soon? If so, are you going to try to refinance with a bank, simply renew the loan, or switch private lenders?

Refinancing with a traditional bank is the ideal scenario. However, this option is available to everyone. If you are thinking of switching private lenders, ask yourself why you are moving towards this direction. Is it because you need more funds? Is it rather the monthly payment that you find too high?

In any case, we recommend that you first contact your current lender to see if it is possible to change the terms of your private mortgage to better suit your current situation.

Following your verifications, are you still thinking about refinancing with a new private lender? Here are the important points to consider.

Legal fees – $ 1,500.00 to $ 2,400.00

In the first place, there are the notary fees to prepare the release of the current private mortgage. These fees can vary between $ 600.00 and $ 900.00.
In addition, notary fees will be incurred to prepare the mortgage of the new loan. Costs between $ 1,000.00 and $ 1,500.00 are to be expected.

Appraisal fees – $ 400.00 to $ 500.00

To ensure the marketability of your property, many private lenders do business with licensed appraisers. Appraisal fees will often be charged before your loan is confirmed.

Brokerage fees – $ 3,000.00 and more

Was the new lender introduced to you by a mortgage broker? If so, there is very likely a brokerage fee to consider. In the area of private mortgages, mortgage brokers usually charge a brokerage fee of 3% to 5% of the loan amount.

So, for a refinancing of $ 100,000.00, you can expect a brokerage fee between $ 3,000.00 and $ 5,000.00 and of up to $ 15,000.00 for a $ 300,000.00 private mortgage. And then there’s the charlatans who charge even higher fees than these listed above.

New private lenders initial lending fees – $ 3,000.00 and more

Finally, the new lender will also charge you for initial lending fees. These fees range from 3% to 5% of the loan amount, with a minimum of $ 3,000.00.

Is it worth it? Our recommendations.

In summary, this cocktail of fees must be taken into consideration when changing private lenders. It is not uncommon to see a customer pay between $ 7,000.00 to $ 15,000.00 only to earn a few thousand dollars more. Quite often, the clients have not done their homework and realize their mistake at the notary’s office.

It is therefore important to make calculations to determine which of the options is the most lucrative for you. In most cases, renewing the existing loan is the best option for the client.

If you have any questions regarding your mortgage renewal with Victoria Financial or if you would like to refinance your private mortgage with us, please contact us so that we can enlighten you.

You can fill a contact form via our website or call us at 1 (877) 220-7738, extension 1.

60 day notice: 3 ways to avoid losing your property

How to avoid losing your property after a 60-day notice (3 proven tips)

Receiving a 60-day notice from your mortgage lender — also known in legal terms as a notice of exercise of a hypothecary right — can be an extremely stressful situation. The ultimate consequence is losing your home. Nobody wants to find themselves without a place to live. Most people don’t have in-depth knowledge of real estate or legal processes, and as a result, they often receive poor advice from people around them — friends, mortgage brokers, real estate agents, etc.

Here are 3 ways to avoid losing your property after receiving a 60-day notice:

 

1. Fix the issues listed in the 60-day notice

This is the simplest solution. The notice of exercise will outline the specific reasons why you received it.
If the reasons are financial (for example, missed payments or unpaid property taxes), you’ll need to repay the amounts owed to stop the process. You can do this by borrowing funds from relatives or by obtaining a second mortgage if your property has sufficient equity.

 

2. Pay off the mortgage lender in full through private refinancing

Since your credit is likely damaged, you’ll need to turn to a private mortgage refinance.
By working with a private mortgage lender like our company, you may qualify for refinancing up to 75% of your property’s value.
Once you’ve repaid the original lender in full, the 60-day notice is automatically cancelled.

 

3. Sell your property

This is often the option most homeowners don’t want to consider, but it’s sometimes the only viable solution if you don’t have the funds to repay the full amount owed within the given timeframe.
Working with a real estate broker is strongly recommended to ensure a solid, fast-sale strategy.
To learn more about the legal deadlines involved in this process, read our article: 60-Day Notice: The Real Timeframes Granted to Borrowers.

If you’ve received a 60-day notice or are currently seeking private mortgage financing, feel free to contact me by email at maxime.st-laurent@financierevictoria.com or by phone at 1 (877) 220-7738 Ext. 101.

Rent-to-Own: What Real Estate Promoters Don’t Tell You

Pourquoi choisir un prêt hypothécaire privé

Rent-to-Own: What Real Estate Promoters Don't Tell You

Rent-to-own can seem like a lifeline for homeowners facing financial difficulty.

Known by terms such as rent-to-own with or without down payment or private rent-to-own, this process is often presented as a miracle solution by certain mortgage brokers and prospecting companies.

But behind the enticing promises lie significant risks that few promoters dare to mention.

 

Understanding Rent-to-Own

Rent-to-own is an agreement comprising two distinct components: a lease agreement and an option to purchase.

Concretely, you sell your property to an investor or a company, who then rents it back to you with the possibility of buying it back later at a predetermined price, generally increased by 5% per year.

 

Key Features

  • Double Contract: A standard lease agreement and a separate option to purchase
  • Fixed Buyback Price: Determined in advance, often with an annual increase of 5%
  • Determined Period: Generally 1 to 3 years before exercising the option to purchase
  • Increased Rent: A portion of the monthly rent may be credited towards the future purchase
Nos solutions de financement alternatif

The Figures That Make You Think

Aspect
Details
Potential Loss of Equity
Up to 100% of your down payment or equity left on the property during the initial transfer
Typical Annual Increase
5% per year
Estimated Success Rate
Less than 50% of tenants are able to exercise their right to purchase
Recourse in Case of Dispute
Limited and often costly

A Purchase Far From Guaranteed

Contrary to what promoters imply, rent-to-own does not guarantee that you will recover your property. In addition to the many contractual clauses that can eliminate your possibility of repurchase (default on payment, non-compliance with maintenance conditions, etc.), a critical factor is completely beyond your control: the financial stability of the buyer.

When you sell your house as part of a rent-to-own agreement, the acquirer becomes the legal owner. If the latter faces financial problems, accumulates tax debts, or defaults on mortgage payments, your entire buyback strategy collapses.

rent-to-own

Client Testimony: When the Dream Turns into a Nightmare

A precarious financial situation

Mr. Paradis was the owner of a house valued at $450,000 in the Montreal area. After several consecutive financial difficulties and the accumulation of debts, his financial institution had sent him a 60-day notice. The threat of losing his property was real and imminent.

Desperate, Mr. Paradis consulted a mortgage broker operating under the banner of a major recognized Quebec brokerage firm. The broker presented rent-to-own as the ideal solution: keeping his family home, stabilizing his financial situation, and buying back the property in one year.

The transaction that changed everything

At the time of signing with the notary, Mr. Paradis met Mr. Bélanger, the real estate investor who was going to acquire his property, for the first time. This detail surprised him: he expected to deal with a structured and recognized company, not with an individual. Despite his doubts, reassured by the words of his mortgage broker, he decided to go ahead.

The terms of the transaction were as follows:

  • Immediate Sale Price: $300,000 (instead of $450,000)
  • Instantaneous Equity Loss: $150,000
  • Buyback Price After 1 Year: $315,000
  • Monthly Rent: $3,500 (allowing the buyer to cover the mortgage, municipal and school taxes, and insurance)

Mr. Paradis had just put $150,000 of accumulated equity at risk, with the hope of stabilizing his finances and buying back his house 12 months later.

 

The unexpected catastrophe

A few months after the transaction, the unthinkable happened. A legal mortgage from Revenu Québec for the amount of $153,453 was registered on Mr. Paradis’s property. The investor, Mr. Bélanger, had failed to pay his taxes related to previous real estate projects and no longer had the means to regularize his situation.

 

The cascading consequences were devastating:

  1. Suspension of Mortgage Payments: Mr. Bélanger stopped paying the monthly installments to the bank
  2. Mortgage Recourse: The financial institution sent a seizure notice
  3. Total Loss of Equity: Mr. Paradis’s $150,000 disappeared
  4. Imminent Eviction: The Paradis family faced a new expulsion

Recourse (almost non-existent)

In the majority of similar cases, the only legal recourse available is to sue the owner. The problem? When the latter is already in serious financial difficulty, the chances of recovering the lost sums are practically nil. Mr. Paradis found himself:

  • Without a property
  • Without the $150,000 of accumulated equity
  • With a family to urgently rehouse
  • In an even more precarious financial situation than at the start

The Unknown Risks of Rent-to-Own

 

1. Dependence on the buyer’s financial stability

You have no control over the investor’s financial management. A legal mortgage, personal bankruptcy, or mortgage default can annihilate your chances of repurchase.

 

2. Restrictive contractual clauses

Rent-to-own contracts often contain dozens of clauses that can cancel your right to purchase:

  • A single late rent payment
  • Non-compliance with property maintenance
  • Unauthorized modifications
  • Failure to pay property taxes (depending on the terms)

 

3. Risking a lifetime of savings

As in Mr. Paradis’s case, the difference between the market value and the initial selling price represents a possible and substantial loss of equity. This sum is never reimbursed to you, even if you ultimately cannot buy back the property.

 

4. No protection against market fluctuation

If the real estate market collapses during your rental period, you remain legally obliged to pay the originally agreed-upon buyback price, even if the real value of the property is now lower.

Talk to a private lender
1 (877) 220-7738

The OACIQ Warns

The OACIQ, the real estate brokerage authority in Quebec, has published a complete guide on rent-to-own.

The organization emphasizes from the outset that “rent-to-own is complex and not suitable for everyone. Caution is therefore advised before engaging in this type of transaction”.

The focus is placed on the risk of losing the sums paid as rent if the tenant does not exercise their option to purchase, whether for financial reasons or because the building is sold to another person.

It is therefore essential to specify that you have different options.

A Safer Alternative: Alternative Financing

 

Why alternative financing is superior

Obtaining refinancing or a second mortgage from an alternative lender offers considerable advantages:

Advantages of Alternative Financing:

  • Keeping the property in your name

  • Preserving your accumulated equity

  • Eliminating the risks associated with a third party’s financial stability

  • Benefiting from clear, regulated conditions

  • Maintaining full control of your real estate asset

Direct Comparison:

Criteria
Rent-to-Own
Alternative Financing
Title to Property
Transferred to a third party
Remains in your name
Equity Preservation
Significant risk (40-60%)
100% equity preserved
Risks Related to Buyer
High
Non-existent
Control of Asset
Lost
Maintained
Transaction Costs
Notary fees × 2
Notary fees × 1
Recourse in Case of Problem
Limited
Standard legal protections

 

Who can benefit from alternative financing?

 

Even if your credit history is imperfect or you have been refused by traditional banks, alternative financing can represent a viable solution. Alternative lenders evaluate your file according to more flexible criteria, focusing in particular on:

  • The value of your property
  • Your current equity
  • Your realistic repayment capacity
  • Your employment history
  • The quality of your financial recovery plan

 

What to remember

 

Beware of too good to be true promises: If a promoter guarantees that everything will go smoothly, be wary. Rent-to-own involves real and documented risks.

Verify the buyer’s solvency: Request proof of financial health, up-to-date tax returns, and a credit check.

Consult an independent lawyer: Do not rely solely on the advice of the promoter or broker who receives a commission on the transaction.

Explore alternative financing first: This option allows you to keep your property and your equity while resolving your temporary financial difficulties.

 

Need help evaluating your financing options?

 

Our team of alternative financing specialists is here to support you. We analyze your situation without judgment and offer concrete solutions that protect your real estate assets.

Contact Financière Victoria today:

Apply for a private mortgage
1 (877) 220-7738

Frequently Asked Questions (FAQ)

Rent-to-own works in two steps: you first sell your property to an investor at a price generally below market value, then you rent it back from them with a contractual option to buy it back after a determined period (often 1 to 3 years) at a price fixed in advance. A portion of your monthly rent may be credited towards the future purchase. However, this formula involves major risks, as you transfer your title to the property and depend on the buyer’s financial stability to eventually buy back your house.

In a rent-to-own with a down payment, the tenant-buyer pays an initial amount (often called an “option premium”) which will be deducted from the final purchase price if they exercise their option. This down payment is generally non-refundable if the option is not exercised. In a rent-to-own without a down payment, no initial payment is required, but this often results in higher monthly rents or an increased buyback price. In both cases, the fundamental risks remain identical: loss of control of the asset, dependence on the buyer’s solvency, and restrictive contractual conditions.

Yes, private rent-to-own is legally possible in Quebec and elsewhere in Canada. However, this formula considerably amplifies the risks. Unlike a transaction with a structured company, you depend on the personal financial situation of an individual, often impossible to verify adequately. As illustrated by the case of Mr. Paradis, an individual may have hidden tax debts or credit problems that will jeopardize your ability to buy back your property. It is strongly recommended to consult a lawyer and exercise thorough due diligence before considering such an agreement.

The main alternatives include mortgage refinancing with an alternative lender, obtaining a second mortgage, or debt consolidation. These solutions allow you to retain legal ownership of your property, preserve your accumulated equity, and avoid the risks associated with dependence on a third party. Even with an imperfect credit history, specialized alternative lenders can evaluate your situation according to more flexible criteria and offer solutions adapted to your financial reality.