Retrofitting of unreinforced load bearing masonry (ULM) in seismic regions has received significant attention, motivated by the substantial stock of ULM buildings and their vulnerability in seismic action. Sprayed application of a thin overlay of strain-hardening cement-based composite (SHCC) has been developed, and showed to significantly improve in-plane shearing resistance. Multiple-cracking shear response of the SHCC overlay also has the potential to improved ductility. However, reflective cracking in the overlay limits the multiple cracking of the SHCC. This paper reports nonlinear finite element (FE) analysis of a strip debonded overlay strategy to distribute diagonal cracking in the SHCC. The FE model is calibrated against previous shear wall tests on double leaf masonry walls, retrofitted with 15 mm SHCC overlays and subjected to pull-over tests. Masonry is modelled as an anisotropic continuum with multi-surface plasticity-based limit functions, allowing compressive hardening and subsequent softening, as well as tensile softening of the masonry. A rotating smeared cracking principal stress limit function is used to model the SHCC, and Coulomb-friction is modelled for the masonry/SHCC interface. After demonstrating that the FE model simulates the in-plane shearing behaviour of the retrofitted walls, a strip debonded approach, which leaves diagonal strips of the masonry-SHCC interface unbonded, is developed and tested computationally, in order to avoid reflective cracking. Validating shear wall tests, on five shear walls, show that the debonded strips cause increased off-diagonal crack spread, and significantly improved ductility compared to a reference retrofitted wall with full interfacial bond.