Mortgage and divorce — practical guide

Divorce with a joint mortgage is one of the worst situations to navigate. Both spouses are jointly and severally liable, regardless of who lives in the property after divorce. Here's how to handle it.

Joint and several liability — what it means

Until the mortgage is settled, both spouses are responsible for the full amount, even if one moves out. The bank can pursue either for the entire balance — it doesn't matter that you split costs informally.

Even after divorce decree, the mortgage agreement is unaffected. You must actively change it.

Three main scenarios

1. Sell the property and split proceeds — cleanest, but may lose money in down market
2. One spouse keeps property, refinances mortgage to their name only — most common
3. Continue joint ownership, both pay — only works for amicable divorces, rarely sustainable

Refinancing to one applicant

The remaining spouse must qualify alone — pass DSTI, DTI, LTV checks on solo income. If they don't qualify, the property must be sold or the divorce delayed.

Procedure: solo applicant gets new mortgage, pays off the old joint mortgage, the leaving spouse signs a transfer of property rights (usually with a settlement payment).

Settlement amount

Typical: leaving spouse gets 50 % of property value minus 50 % of remaining mortgage. Example: property 5M, mortgage 3M → remaining equity 2M, leaving spouse gets 1M.

Court can adjust based on contributions, custody of children, etc.

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