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Old 22.06.2014, 22:49
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Selling a mortgage with a house

Currently rates are going down again. Recently here in Vaud a broker here got 1.59% for 10 year fix and you can get 15 year fixed at 2%.

When considering the mortgage options I am wondering if it is worth getting a very long mortgage (15 years for example) because from what I understand a mortgage can be sold with a house, so if you buy now but want to sell in 5 years when rates will be coming back up, you could flog the house with say 10 years left on a 15 year term at 2%, which surely would help the sale rather than hinder it.

Can anyone tell me if this is reasonable logic or are there some laws or rules I have missed which mean I cannot sell a mortgage with a property. I am of course aware that escaping a mortgage would be a non starter Ina 15 year term but I am thinking that if i can sell it if i wish to move then I don't see much downside to a long term fix.

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Mike
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Old 22.06.2014, 23:21
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Re: Selling a mortgage with a house

I think the status of the buyer would have to be vetted to sell a mortgage to them, I like the idea, however I'm sure the bank would prefer a new mortgage with associated set up fees etc??
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Old 22.06.2014, 23:23
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Re: Selling a mortgage with a house

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I think the status of the buyer would have to be vetted to sell a mortgage to them, I like the idea, however I'm sure the bank would prefer a new mortgage with associated set up fees etc??
Yes I'm hoping one if the EF finance experts can shed a bit more light. There's one here being sold with 7 years remaining on it so it looks like it can be done at least.
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Old 22.06.2014, 23:26
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Re: Selling a mortgage with a house

How desireable is your property? Would you expect to have buyers clamoring to make you an offer? If so, then you can more easily dictate terms.

But if your property isn't an easy sell...

To give you an idea: The seller wanted us to take over the mortgage on our house. This was of no interest to me - but his proposing this told me was that the seller had a weak point. So I low-balled my offer. And refused to take over his mortgage.

Another buyer might have had a different view on taking over a mortgage, but just be aware that you might be complicating the sale.
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Old 22.06.2014, 23:35
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Re: Selling a mortgage with a house

Well if you get a mortgage with a low rate and some years later when you want to sell and rates are higher then some people would find that attractive.
You need to balance things carefully.
For example ten years fixed at 2% or less is good now but five years down the track then five years fixed at 2% might not look so good?
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Old 22.06.2014, 23:54
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Re: Selling a mortgage with a house

Money is so cheap these days, it wasn't too long ago I tried to get a guy out of a 10year fixed at 10%
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Old 23.06.2014, 10:30
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Re: Selling a mortgage with a house

The fix will become an asset or a liability depending on rates when yup sell. The mortgage paperwork will always be sold as it costs several thousand to set up.
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Old 26.07.2015, 01:59
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Re: Selling a mortgage with a house

This thread is the nearest to what i need that i found. But my question is a bit more specific - after (or, rather, if) you sold your house with mortgage, which parts do you get returned? Only downpayment (or released pledge on 2/3 pillar) or anything else?
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Old 26.07.2015, 10:14
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Re: Selling a mortgage with a house

Whatever profit there is over the puchase price I assume, same as anywhere else. If you have a mortgage of 250k and sell for 500k then you get what's left after paying off the 250k and any outstanding interest, notary costs, etc.
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Old 26.07.2015, 21:17
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Re: Selling a mortgage with a house

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This thread is the nearest to what i need that i found. But my question is a bit more specific - after (or, rather, if) you sold your house with mortgage, which parts do you get returned? Only downpayment (or released pledge on 2/3 pillar) or anything else?
You will receive an identical amount either way assuming the sale price exceeds the mortgage outstanding. If the mortgage exceeds sale price then you have to pay the bank the difference.
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Old 26.07.2015, 21:49
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Re: Selling a mortgage with a house

I don't get how passing on the mortgage would work, unless the buyer has the same deposit you paid and the house hasn't gone up in value.

Lets say you bought house for 500,000. You put down 200,000 deposit so have a mortgage for 300,000. You now sell the house for 600,000 and the buyer has a deposit of 120,000.... they need a mortgage for 480,000 not 300,000.
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Old 27.07.2015, 10:34
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Re: Selling a mortgage with a house

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I don't get how passing on the mortgage would work, unless the buyer has the same deposit you paid and the house hasn't gone up in value.

Lets say you bought house for 500,000. You put down 200,000 deposit so have a mortgage for 300,000. You now sell the house for 600,000 and the buyer has a deposit of 120,000.... they need a mortgage for 480,000 not 300,000.
There will be multiple mortgages deeds. Often the amount of on the paper will exceed what your borrowing.
The mortgage deeds are very expensive so they will never get cancelled, they are bearer documents, so who holds the piece of paper has the security.
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Old 27.07.2015, 11:08
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Re: Selling a mortgage with a house

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When considering the mortgage options I am wondering if it is worth getting a very long mortgage (15 years for example) because from what I understand a mortgage can be sold with a house, so if you buy now but want to sell in 5 years when rates will be coming back up, you could flog the house with say 10 years left on a 15 year term at 2%, which surely would help the sale rather than hinder it.
It would surely help the sale rather than hinder it subject to two things:
- Rates are higher.
- Your house value is higher or the same as it is when you took out the mortgage.

You can not have your cake and eat it, if you think rates will go up, valuations will necessarily go down. And no-one would take over a mortgage for more than the house is worth.
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Old 27.07.2015, 11:42
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Re: Selling a mortgage with a house

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It would surely help the sale rather than hinder it subject to two things:
- Rates are higher.
- Your house value is higher or the same as it is when you took out the mortgage.

You can not have your cake and eat it, if you think rates will go up, valuations will necessarily go down. And no-one would take over a mortgage for more than the house is worth.
yes completely agree. you need both of these things, otherwise it wouldnt make any sense of course.
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Old 27.07.2015, 11:54
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Re: Selling a mortgage with a house

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yes completely agree. you need both of these things, otherwise it wouldnt make any sense of course.
In this case then your only problem would be the desirability of your property (as previously pointed out), as packaging the mortage along with the house will obviously restrict your buyers who might not necessarily be willing to be forced to take on your mortgage.

Plan for the worst and hope for the best... The rest is pure speculation.
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Old 27.07.2015, 12:55
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Re: Selling a mortgage with a house

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It would surely help the sale rather than hinder it subject to two things:
- Rates are higher.
- Your house value is higher or the same as it is when you took out the mortgage.

You can not have your cake and eat it, if you think rates will go up, valuations will necessarily go down. And no-one would take over a mortgage for more than the house is worth.
If the rates are higher then you calculate your 'loss' & let the buyer pay you the difference. If they redeem they will have to pay so makes no difference. The amount they have to pay you could easily be in the 10k to 100k range. Fixed rate mortgages are a double edged sword.
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Old 27.07.2015, 13:23
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Re: Selling a mortgage with a house

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I don't get how passing on the mortgage would work, unless the buyer has the same deposit you paid and the house hasn't gone up in value.

Lets say you bought house for 500,000. You put down 200,000 deposit so have a mortgage for 300,000. You now sell the house for 600,000 and the buyer has a deposit of 120,000.... they need a mortgage for 480,000 not 300,000.
Yes, it's actually passing on the mortgage, not selling it.

In this case the buyer would need a second mortgage of 180,000.

Passing a mortgage on with a property is to the seller's advantage as they can avoid an early termination which can be substantial. The buyer might also find that the lender is quite happy to make a further loan without too much palarva...
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Old 27.07.2015, 13:37
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Re: Selling a mortgage with a house

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If the rates are higher then you calculate your 'loss' & let the buyer pay you the difference. If they redeem they will have to pay so makes no difference. The amount they have to pay you could easily be in the 10k to 100k range. Fixed rate mortgages are a double edged sword.
Not sure I follow

If the rates (i.e. interest rates?) then your loss is theoretically going to come from a lower house value. Why would the buyer pay you for the loss you incurred on the house??

If they redeem what?? The mortgage you took out? They're only interested in buying the house, the mortgage you take out is your problem not the buyers, the buyer would be doing you a favour by taking over your mortgage, which doesn't exist in the real world without any benefit to them.
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Old 27.07.2015, 13:53
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Re: Selling a mortgage with a house

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Not sure I follow

If the rates (i.e. interest rates?) then your loss is theoretically going to come from a lower house value. Why would the buyer pay you for the loss you incurred on the house??

If they redeem what?? The mortgage you took out? They're only interested in buying the house, the mortgage you take out is your problem not the buyers, the buyer would be doing you a favour by taking over your mortgage, which doesn't exist in the real world without any benefit to them.
As you've said yourself, its speculation. You cannot say there is going to be a lower house value. If rates go up to 5% perhaps there could be, but if rates move from 0.5% to 1.5% then this may not impact pricing of houses it depends on much more than just that.

So in the event of a small rate increase (say 1%) without a loss of value, or just a flattening out as is happening now, then you are now selling something attractive to the buyer.

It works both ways.
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Old 27.07.2015, 14:38
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Re: Selling a mortgage with a house

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but if rates move from 0.5% to 1.5% then this may not impact pricing of houses it depends on much more than just that.
That's not speculation... that's just wishful thinking
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