Removing a spouse from a mortgage in Canada is the most common request we get, typically during a legal separation. However, a legal separation isn’t the only reason one might want to remove a name from a mortgage, nor is it always a spouse. Other reasons might be a split in a business partnership (investors), divorce, death, bankruptcy, or other personal circumstances that require a name to be removed.
Why should I remove my ex-spouse from the title of a home?
When relationships sour, or individuals move on, they often don’t want their credit to be jeopardized by a lack of responsibility from other parties. Sure, they might put their trust in the other person to stay current with the mortgage, but if a name isn’t removed from the mortgage, they are still held financially liable should anything happen in the future – regardless of what payment arrangements were agreed upon privately. Soured relationships are just one reason and someone may still want to be removed from a mortgage even when the relationship is healthy and amicable.
There are 2 scenarios to consider when trying to remove someone from a Mortgage in Ontario.
- The name of the other individual is only on the mortgage, NOT on the title (guarantor)
- The name of the other individual is both on the mortgage AND on the title (co-signer)
Guarantor: Removing a Name from a Mortgage in Ontario:
To remove someone’s name only from a mortgage in Ontario, the name must NOT be registered on the title. Under this scenario, you can refinance the mortgage, either with the same bank or a new bank, to take over the mortgage under your name only. However, qualifying with only one income might be harder than when you were first qualified (assuming the guarantor contributed income to the application the first time you were approved). The name you are removing will have no responsibility to the new mortgage being registered against the property. Nor will that party need to participate in the refinance/transfer of the mortgage.
Co-Owner: Removing a name from House Title in Ontario:
Likewise, refinancing is also a solution to remove a name from the Mortgage AND House Title in Ontario. The only difference under this scenario is that their name is both on the mortgage and the title (deed) of the home. You cannot remove a co-signer from a mortgage, without also removing them from the title (and vice versa). The person being removed must be agreeable to coming off the title of the home and must participate in signing with a lawyer to do so. This can be problematic if the person being removed from the title feels entitled to equity in the home.
How to remove someone from a Mortgage in Ontario, without refinancing:
To remove a name from a Mortgage in Ontario, without refinancing, the borrower can request something called an ‘assumption’ or ‘loan modification’ from the bank that holds their mortgage. This assumption is not offered by every bank/lender, and in the case that it isn’t, refinancing the mortgage will be the only viable option.
Do I have to buy out the person being removed from the mortgage?
It depends. If the person is on the title and therefore has a stake (% share) of the property, they might not agree to be removed from the mortgage UNLESS they are bought out (or compensated their fair share). A mortgage buyout would require you to refinance the mortgage at an amount enough to buy out the individual’s share.
Do you need to remove a name from a Mortgage in Ontario? Do you need to remove a name from a House Title in Ontario? Do you need to buy out an ex-spouse’s mortgage share? Call us at (905) 455-5005 and get expert guidance and the next steps on refinancing your mortgage.