Selling a house is a significant decision, and if you have an outstanding mortgage on the property, it can add an extra layer of complexity. But can you sell your house with a mortgage?
The answer is yes, but there are certain things you need to consider before putting your property on the market -
- First and foremost, it's essential to understand that selling a house with a mortgage means that you'll need to pay off the outstanding amount to the lender. In most cases, the sale proceeds will be used to pay off the mortgage, and you'll receive any remaining amount. If the sale price is lower than the outstanding mortgage, you'll need to pay the difference out of your own pocket.
- Before selling your house, you'll need to contact your mortgage lender to get a statement of the outstanding balance on your mortgage, which will include the interest and any fees due. You'll also need to inform your lender of your intention to sell the property.
- If you're selling your house before the end of your mortgage term, you'll need to consider any early repayment charges that may apply. Early repayment charges can vary depending on the lender and the type of mortgage you have. For example, if you have a fixed-rate mortgage, the early repayment charge may be a percentage of the outstanding balance, and if you have a variable rate mortgage, the early repayment charge may be a set amount.
- Another option to consider is transferring your mortgage to the buyer. This process is known as a mortgage transfer or a mortgage assignment. Essentially, the buyer takes over your mortgage, and the lender transfers the legal title of the property to the buyer. However, not all lenders allow mortgage transfers, and there may be additional fees or charges involved.
- If you're unable to sell your property for the full amount of the outstanding mortgage, you may consider other options such as a short sale or a deed in lieu of foreclosure. A short sale is when the lender agrees to accept less than the outstanding amount on the mortgage, and a deed in lieu of foreclosure is when you voluntarily transfer ownership of the property to the lender to avoid foreclosure.
- When selling a property with a mortgage, it's essential to work with a reputable real estate agent who has experience in dealing with such transactions. They can guide you through the process and help you navigate any potential obstacles that may arise.
In conclusion, selling a house with a mortgage is possible, but it's important to understand the process and any associated costs involved. It's always a good idea to consult with your mortgage lender and a real estate agent to ensure that you're making the right decision and that you're aware of all your options.
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This blog is for educational purposes, but everyone's case is unique, and local guidelines and regulations may change. Our mortgage advisors can help you with any question you may have and have the latest advice. Get in touch.