Spousal buyout mortgage: how to keep the home after a separation
Buy out your ex at up to 95% of value with an insured mortgage. If your income is not ready yet, a short private second can bridge.
Written and reviewed by Asim Ali, Mortgage BrokerUpdated 5 November 2026
Licensed: BCFSA (BC) · RECA (Alberta) · FSRA (Ontario) · check our licences
A spousal buyout mortgage lets one owner buy out the other after a separation. The insured version, through CMHC, Sagen or Canada Guaranty, is treated like a purchase. It can go to 95% of the home's value, not the 80% cap on a normal refinance. You need a signed separation agreement, both names on title, and income that passes the stress test on your own. If your support income is too new, a B-lender (6.0-8.5% plus about a 1% fee) or a private second for the buyout only (9.49-14.99%, 12 months) can bridge until it has a track record.
What is a spousal buyout mortgage?
It is a new mortgage that pays your ex their share of the home. You keep the house. Your ex comes off title. The money pays out the old mortgage, then pays your ex the amount in your separation agreement. People also call it a divorce mortgage, an equity buyout or a separation refinance. It works the same way for married and common-law couples in BC, Alberta and Ontario.
The insured spousal buyout: up to 95% of value
This is the cheapest route if you qualify. Mortgage insurers treat a buyout as you buying your ex's share. That is why the limit is 95%, like a purchase. A normal refinance stops at 80%.
- Both names on title now. Sagen's policy says both parties must be on title when the buyout happens.
- Proof of the price. A signed separation agreement, a court order or an agreement of purchase and sale showing the buyout amount.
- You live there. It must be your home, not a rental.
- You qualify alone. Your income must pass the stress test: the higher of your rate plus 2% or 5.25%.
- Home price under $1.5 million. That has been the cap on insured mortgages since 15 December 2024.
- An insurance premium. About 2.80% to 4.00% of the loan, added to the mortgage.
Insurers differ on joint debts. CMHC generally limits the money to paying out your ex. Sagen and Canada Guaranty may let you pay off joint debts listed in the agreement. Ask before you sign.
| Illustrative example: Calgary, insured buyout | Amount |
|---|---|
| Appraised value | $700,000 |
| Existing mortgage paid out | $450,000 |
| Buyout paid to the former spouse | $125,000 |
| New loan before insurance (82% of value) | $575,000 |
| Insurance premium at 2.80%, added to the loan | $16,100 |
| New mortgage at 4.79%, 5-year fixed, 25-year amortization | $591,100; about $3,368 a month |
A normal refinance would stop at $560,000 (80%), $15,000 short of the buyout. Rate is within the November 2026 bank range of 4.5-5.5%. Premium tiers vary by insurer.
Insured buyout, B-lender or private second: which one?
Pick the cheapest route your income passes today.
| Insured buyout | B-lender buyout | Private second (buyout only) | |
|---|---|---|---|
| Most you can borrow | 95% of value | 80% of value | 80% combined in big cities |
| Rate | Bank rates, 4.5-5.5%, 5-year fixed | 6.0-8.5%, 1-2 year term, plus about 1% fee | 9.49-14.99% interest-only, 12 months |
| Other costs | Insurance premium 2.80-4.00% | Lender fee, legal, appraisal | 1-2% lender fee, 1-2% broker fee, legal |
| Income test | Full stress test on your income alone | More flexible on new support income | Based on equity; you must cover the payments |
| Your existing first mortgage | Replaced | Replaced | Kept at its rate |
| Best for | Steady income that qualifies now | Self-employed, or support just started | A cheap first, and income needing 6-12 months to season |
Why timing matters: buy out while both names are on title
The 95% limit only applies to the buyout itself. Once your ex is off title, any later refinance is a normal one, capped at 80%. So if you bridge with a private second, plan the exit at 80% of value or less. If you need more than 80%, wait and do the insured buyout once your income qualifies. Talk to your family lawyer about a closing date that gives you that time.
The private second for the buyout only
This keeps your low-rate first mortgage in place. A private second pays your ex. You then refinance both into one mortgage once your support income has a track record.
| Illustrative example: Surrey townhouse, private second | Amount |
|---|---|
| Appraised value | $780,000 |
| First mortgage kept at 4.29%, 3 years left | $420,000 |
| Private second at 11.49%, interest-only, 12 months | $160,000 |
| Combined loan-to-value | 74% |
| Fees: 2% lender, 1.5% broker, $2,200 legal and appraisal | $7,800 |
| Net to pay the $150,000 buyout | $152,200 |
| Monthly interest on the second | $1,532 |
| 12-month cost of the second (interest $18,384 + fees) | $26,184; APR about 16.8% |
At month 12 you refinance $580,000 into one mortgage at a bank or B-lender. That is 74% of value, under the 80% cap. The exit works only if your income, including support, now qualifies. We set that plan in writing before the second funds. How private seconds work.
Your ex stays on the first mortgage until the lender releases them or you refinance. Title can change, but the debt does not. Your separation agreement should say who pays it and by when.
What your separation agreement should show
Lenders read the agreement line by line. Missing details are the most common reason a buyout stalls.
- Both names, the property address and who keeps the home.
- The exact buyout amount, and what it covers.
- Spousal and child support: amounts, start dates and how long they last.
- Which joint debts are paid from the buyout, and which you keep.
- Signatures from both parties, each with independent legal advice.
Support counts as income only once it is paid. Many lenders want to see several months of payments land in your bank account. The number varies by lender.
How long a spousal buyout takes
Agreement and documents
Signed separation agreement, income papers, current mortgage statement.
Appraisal and pre-approval
We order the appraisal and test all three routes against your income.
Lender and insurer approval
Insured files go to CMHC, Sagen or Canada Guaranty. Private seconds can approve in days.
Closing
Your lawyer pays out the old mortgage, pays your ex and changes title.
Typical ranges, not promises. Court dates, appraisals and strata documents can add time.
Province notes
BC
A transfer to a former spouse under a written separation agreement or Family Law Act order is exempt from property transfer tax. Attach the agreement. BC lenders.
Alberta
No land transfer tax, only registration fees at Land Titles. Brokers are licensed by RECA. Alberta lenders.
Ontario
Ontario Regulation 696 exempts transfers under a written separation agreement or court order from land transfer tax. Brokers are licensed by FSRA. Ontario lenders.
Spousal buyout questions
How does a spousal buyout mortgage work in Canada?
You take a new mortgage on the home. It pays out the old mortgage and pays your ex their share. Your ex comes off title. With mortgage insurance you can borrow up to 95% of the value.
Do I need to be divorced to do a spousal buyout?
No. A signed separation agreement is usually enough. A court order also works. The divorce can come later.
Can I qualify for a mortgage on support income?
Often, yes. Lenders want the support written in the agreement and proof it is being paid. If it just started, a B-lender or private second can bridge until it has a track record.
Can I keep my current mortgage and just buy out my ex?
Yes, with a second mortgage for the buyout. Your existing lender must agree to release your ex, or your ex stays on the loan until you refinance. Plan that refinance at 80% of value or less.
How much does a spousal buyout cost?
An insured buyout adds a premium of about 2.80-4.00% of the loan, plus legal and appraisal. A private second costs 9.49-14.99% interest-only plus 2-4% in fees. On a $160,000 second for 12 months, the APR is about 16.8%.
Sources. Genworth Canada (now Sagen), Lender Update: Equity Buy-out Policy, 5 February 2019 (purchase up to 95% LTV; both parties on title; agreement, court order or APS) · Department of Finance Canada, mortgage reforms effective 15 December 2024 ($1.5 million insured price cap) · Divorce.law and Canadian broker guides on CMHC, Sagen and Canada Guaranty buyout rules and premiums, 2026 · BC Ministry of Finance, property transfer tax exemption codes · Ontario Ministry of Finance, land transfer tax: transfers between spouses (R.R.O. 1990, Reg. 696) · Private Mortgage Desk rate sheet, November 2026.
Talk it through with a licensed broker before you decide
Tell us what is going on in a few lines. We call you back the same day with what lenders will say, what it costs in dollars, and how you get back to a bank. If private is the wrong tool, we say so.
- Your full cost, in dollars, before you commit
- The lender named on your commitment letter
- A written plan to exit within 12-24 months
Asim Ali, Mortgage BrokerSurrey office · BC, Alberta and Ontario
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- 1Same-day call from Asim Ali or a licensed colleague
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Asim Ali, Mortgage Broker
Licensed in BC, Alberta and Ontario · (604) 591-3590