Divorce has a way of turning things that used to be simple into surprisingly complicated questions. Who keeps the couch? Who gets Christmas morning with the kids? And what exactly happens to that enormous mortgage you signed together back when you were still agreeing on paint colours?

If you own a home together, figuring out the mortgage is usually one of the bigger financial decisions in a separation.

Divorce doesn’t make the mortgage disappear

If both spouses are borrowers on the mortgage, separating doesn’t automatically remove either person from the loan. Joint borrowers remain responsible for the debt until the lender agrees to a change or the mortgage is paid out.

That is important even if your separation agreement says one spouse will make the payments. As far as the lender is concerned, the existing mortgage contract is still the existing mortgage contract.

In Alberta, property division following the breakdown of a marriage is governed by the Family Property Act. Similar property-division rules can also apply to qualifying adult interdependent partners.

This is one reason I recommend getting both legal and mortgage advice early. Your lawyer deals with who is entitled to what. I deal with whether the mortgage plan you have in mind can actually be financed.

Option 1: Sell the home

Sometimes the cleanest solution is to sell the property, pay off the mortgage and divide the remaining equity according to your agreement.

The catch is that selling during a closed mortgage term may mean breaking the mortgage early, which can result in a prepayment penalty. There may also be realtor fees, legal fees and other selling costs to account for before deciding how much equity is actually available.

Option 2: One spouse keeps the home

This is often the preferred option when children are involved or one person simply wants to stay.

Usually, the person keeping the property needs to qualify for the mortgage based on their own financial situation. That means looking at income, debts, credit and the size of the mortgage required.

There may also be an equity buyout. For example, if one spouse is entitled to $100,000 of the home’s equity, the new financing may need to cover the existing mortgage plus some or all of that amount.

This is where planning before signing the final separation agreement can be extremely helpful. Agreeing that “Alex keeps the house” is considerably easier than discovering afterward that Alex’s income says otherwise.

Option 3: Keep the home together temporarily

Some separating couples decide not to sell or refinance immediately. One spouse may remain in the home while both stay on the mortgage for a period of time.

Alberta courts can also issue an Exclusive Possession Order when separating spouses or adult interdependent partners cannot agree about who will remain in the home. That determines possession temporarily; it does not itself settle the final division of the property.

Keeping a mortgage jointly can work, but both people’s credit and borrowing ability may remain tied to that debt. It needs to be approached carefully.

Talk to your mortgage broker before making the decision

Divorce is difficult enough without finding out three weeks before a deadline that the financing doesn’t work.

If you’re separating in Alberta and one of you hopes to keep the home, I can review the mortgage, estimated equity, income and debts and help determine what financing options may be available. The earlier we look at the numbers, the more options we usually have.

And unlike deciding who gets the air fryer, this is one decision that’s worth slowing down for.