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First: is the house marital property?

If it was bought during the marriage, almost always yes, whoever is on the deed. If one spouse owned it before, the house may be separate — but marital money spent on the mortgage or on improvements usually gives the marital estate a claim on part of the value, and adding a spouse to the deed often converts it entirely.

The number that matters

Not the value of the house. The equity: market value minus what is owed, minus the cost of selling if you sell. A $600,000 house with a $450,000 mortgage is a $150,000 asset, and after selling costs of 6 to 8 per cent, closer to $110,000.

Both spouses need to agree on the value. The options are an appraisal, which costs a few hundred dollars and carries weight, or a comparative market analysis from an agent, which is usually free and carries less. Where the number is contested, one appraiser chosen jointly is far cheaper than two appraisers chosen separately.

Option one: sell it

The cleanest outcome. The house sells, the mortgage is paid off, selling costs come out, and the equity is divided according to whatever split applies.

It ends joint financial exposure completely, which is its main advantage. Both of you can borrow again on your own terms. Nobody is relying on the other to make a payment.

The disadvantages are real: both households have to move, the children change homes, and the timing may be poor.

Option two: one spouse buys the other out

One spouse keeps the house and compensates the other for their share of the equity — in cash, or by giving up a claim on other assets such as a retirement account.

The step people underestimate is the mortgage. A divorce decree does not remove anyone from a mortgage. The lender is not a party to your divorce and is not bound by it. If both names are on the loan, both remain liable to the lender no matter what the decree says.

So a buyout almost always requires refinancing into the keeping spouse's name alone. That means qualifying on one income, which is where many buyouts fail. Work out whether the refinance is achievable before agreeing to the buyout, not after.

A common trap: a decree that says one spouse will refinance "within a reasonable time" and then they cannot. The other spouse stays on the loan, their credit stays exposed, and their ability to get their own mortgage is impaired. If a buyout is the plan, the agreement should set a hard deadline and say what happens if it is missed — usually that the house goes on the market.

Option three: keep it jointly for a period

Sometimes called a deferred sale. Both names stay on the house, one spouse lives there — often the one with the children most of the time — and it is sold at an agreed trigger, commonly when the youngest child finishes school.

It can be the right answer where stability for the children matters and neither spouse can afford a buyout now. But it keeps two people financially entangled for years, and the agreement has to be specific about who pays the mortgage, who pays for repairs, what happens if one of them wants out early, how the sale price will be decided, and how the eventual proceeds are split.

Vague deferred-sale agreements generate more litigation than almost anything else in a divorce file.

Option four: one spouse keeps it outright

Where the house is separate property, or where it is traded against assets of similar value and the mortgage is already in one name, the question is simpler. The refinance problem disappears, and so does most of the risk.

The case against keeping it

Keeping the house is the most common instinct and often the worst financial outcome, for a set of reasons that are easy to see individually and easy to miss together:

• It is not liquid. Trading your share of a retirement account for the house means your assets are now in a building you cannot spend.
• One income, same running costs. Mortgage, taxes, insurance, utilities and maintenance do not fall by half. Maintenance alone runs 1 to 2 per cent of the value a year, and it tends to be ignored in the budget.
• The refinance may be at a worse rate. Replacing an old low-rate mortgage with a current-rate one can raise the monthly payment substantially even with no additional borrowing.
• The tax treatment differs. Married couples can exclude up to $500,000 of gain on a primary residence; a single filer, $250,000. In a long-held home with large appreciation, selling while still married can be worth a great deal.

A practical test

Before committing to keep the house, build the actual post-divorce monthly budget — the refinanced payment, taxes, insurance, utilities, maintenance at 1.5 per cent of value annually — against the income you will actually have, including support. If housing consumes more than about a third of it, the house is likely to become the thing that determines every other decision for years.

Being able to afford the house for a year is not the same as being able to afford it.

Warning:  This post is neither financial, health, legal, or personal advice nor a substitute for the advice offered by a professional. These are serious matters, and the help of a professional is recommended as it can impact your future.