How to Protect Your Down Payment and Home Equity in Ontario: The "Mortgage Prenup"

Buying a home is the biggest financial milestone for most Ontario couples. But if you are putting down a significant amount of your own savings—or if your parents are gifting you the down payment—there is a legal "trap" you need to know about.

In Ontario, the Matrimonial Home is treated differently than any other asset. Without a specific legal agreement, the equity in your home is usually split 50/50 upon divorce, regardless of who paid the down payment.

At PrenupServices.ca, we call the solution an Equity Protection Agreement (commonly known as a "Mortgage Prenup"). Here is how it works and why you need one.

1. The Matrimonial Home "Trap"

Under the Ontario Family Law Act, the home you live in as a married couple is special. Even if you owned the house before the wedding, or used a $100,000 inheritance to pay off the mortgage, the law defaults to an equal split of the home’s value if you separate.

Effectively, the moment you get married, your private down payment becomes a "gift" to your spouse.

2. What is an Equity Protection Agreement?

A "Mortgage Prenup" drafted by PrenupServices.ca is a customized contract that "carves out" your initial investment. It ensures that if the house is sold or the relationship ends:

  • You get your "Seed Money" back: If you put $150,000 down, that $150,000 is returned to you first.

  • The "Growth" is Shared: You can still agree to split any increase in the home’s value fairly, ensuring both partners benefit from the market.

  • Protection Follows You: If you sell your first home and buy a second one, PrenupServices.ca ensures the protection "rolls over" to the new property.

3. Protecting the "Bank of Mom and Dad"

Many Ontario down payments are now funded by parents. If your parents give you $100,000 for a house, they likely want that money to stay in the family. Without a professional agreement from PrenupServices.ca, that family inheritance could be halved in a legal dispute.

4. Why a "DIY App" Isn't Enough for Your Equity

When you are protecting six figures of equity, a $500 software template is a massive risk. Generic apps often fail to use the specific language required to survive an Ontario court challenge.

  • The PrenupServices.ca Difference: We are a licensed law firm. Our agreements are drafted by Ontario lawyers and backed by LawPro professional liability insurance. We don't just give you a form; we give you an enforceable legal shield.

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