Can you keep your mortgage after a sale?
Do you want to sell the property for which you have taken out a loan? What happens to the mortgage loan insurance contract after the sale?
There are several reasons why you might want to sell the property for which a loan is in progress. In practice, in the case of a sale, the credit must be settled early before the end of the repayment period. However, there are other options available to you. Explanations.
Reimburse your mortgage in advance
It is not uncommon for households to leave the housing they have financed with a loan, whether it is to have a larger property or to prepare for retirement.
In case of sale of the property before the term of the mortgage, it must be paid in advance, especially if a mortgage or lien of lender money is registered for the benefit of the bank. In this case, you will also have to pay prepayment penalties equal to 6 months of interest at the average credit rate and not to exceed 3% of the outstanding capital. These indemnities do not apply in the event of a sale related to a change in professional activity or a change of workplace, in the event of the death of the borrower or his spouse, in the event of the cessation of activity of the borrower or spouse.
Request the transfer of the mortgage
Another solution is to request the transfer of the credit subscribed. This allows you to keep your old loan to finance the construction or acquisition of a new home. By choosing this option, you keep the interest rate and the guarantee of the previous contract and avoid paying the prepayment fees. The transfer of credit, however, requires that the amount of the new transaction be equal to or greater than the capital remaining due.
Regarding loan insurance, it is possible to keep the previous contract, the latter on the loan and not on the property. If it is an external insurer, you have every interest in negotiating the amount of the contribution or changing insurance by comparing online offers.
Opt for the loan relay
The bridge loan is an interesting alternative if you want to sell the home for which you have a current loan to acquire another property. Indeed, this loan finances the purchase of the new property pending the actual sale of your principal residence. You thus have between one and two years to conclude the sale of your first home, according to the delay granted by the banking organization. Only disadvantage: the interest rate of the new loan will be higher than that of the credit initially subscribed.
Of these three options, borrowers most often turn to the loan transfer that keeps a fixed rate advantageous, especially if interest rates have risen in the meantime. Do not hesitate to contact your bank advisor to study these different possibilities.