Every mortgage in Alberta is technically assumable. When you sell your home you are, essentially, terminating your financing agreement with your bank or lender so that someone else can take over the payments on the property. With assumable mortgages, you basically sell your home with your mortgage.
Let’s say you’ve found the perfect Calgary or Okotoks home for your family. Inquire if the homeowner is willing to let you assume their mortgage, and then go over the details in depth. An assumable mortgage may be attractive if the current homeowner has a low-interest, longer-term mortgage, and if mortgage rates have risen since they bought. If you are a seller and have a mortgage with a great rate and flexible options, you may want to market your home and its assumable mortgage.
Assumable mortgages can get complicated, however. Your entire mortgage must be assumed by the buyer in order to no longer be responsible for repayment. As well, there will most likely be additional prepayment charges on the unassumed balance if your buyer only assumes a portion of your mortgage. For example, if your current mortgage is $350,000, and your buyer chooses to assume only $300,000 of that, you are still responsible for the outstanding $50,000 plus prepayment fees.
Given that fact that if you choose to assume a mortgage, you still must qualify for it, assumable mortgages are not as popular as they used to be. You will need to go through the exact same process to assume a mortgage as you would to apply for a new one, so buyers are exercising their options.
Mortgage brokers like Mortgages By Candice have access to a number of lenders offering excellent rates and incentives, and can tailor your mortgage to perfectly suit you and your lifestyle. We will find you the very best mortgage rates for your new home in Calgary and ensure your mortgage is as flexible as you need it to be. We’ll be happy to perform a financial review for you to get you started!