October 21, 2005
By Paul Jasiura
It is legally possible in Ontario to have the home put into one spouse’s name alone, even though they are married. Of course, the mortgage will be in one name alone in that case.
The question then arises: will one spouse have the financial horsepower with the Bank to take on the mortgage on his or her own, or will the approved amount of your mortgage loan also require the Bank to take into account the amount of the other spouse’s earnings?
If the registered owner financially qualifies for the loan, then the mortgage will be in one name alone. This can obviously have advantages in keeping the other spouse’s credit free of that risk. It does mean, however, that the off-title spouse will not be developing a positive credit history arising out of mortgage payments. As utilities often are in the name of the owner only, the non-owning spouse may also not develop a history with the hydro company, telephone company et cetera, and in the event of marital split, may have to pay new customer deposits.
If the owning spouse does not have enough income to qualify for the loan, the Bank may require the other spouse to guarantee the mortgage loan: that is not necessarily something everyone would be prepared to do if they are not also on title as an owner. There are some Banks as well who insist on both spouses signing as mortgagees (not mere guarantors) when both their incomes are required to be factored in to the approved amount of the mortgage. If that is the case, then in effect the Bank will be forcing the title to the home to be put into joint names.
Once the home is used as a family residence, it becomes the “matrimonial home” under the Family Law Act , regardless of title (ie. regardless of who owns the home). There are certain possessory issues that arise from that fact, which are described in legal tips contained on the Family Law directory of our website, under “Matrimonial Home”.
A Matrimonial Home also must be included in Family Property on marital breakdown, regardless of when it was acquired, or who owns the home. The importance of Family Property in sorting out money matters after break-up is described in a Family Law tip as well.
Marriage contracts are excellent vehicles to manage the division of assets. With only a few exceptions, they allow spouses to make their own rules as to who gets what, long before the break-up sours relationships. As the purchase of the home is the largest financial investment most couples ever make, this is an event which might merit considering a marriage contract. It would be especially important to have a marriage contract in place if one of the spouses either brings the Matrimonial Home into the marriage on the wedding day; or if one of the spouses improves or pays down/pays off the mortgage on the Matrimonial Home from inherited or gifted money received after the wedding day.