Hello All,

I am interested to know the rule position - Incase if I buy a house with a mortgage from the bank and sell it after some years (say 15 years):

1. Can I transfer the remaining mortgage to the Bank with the same interest conditions with the new buyer ?

2. Can I transfer the remaining mortgage to the Bank with the "then" interest conditions with the new buyer ?

or I need to collect the money from the new buyer and pay the remaining mortgage.

cheers

Impossible to say. Depends on the interest agreed, for how long, for what amount etc

Lets assume 800 K mortgage -> 50% on fixed and 50% on variable.

Fixed of 3% for 10 years and Variable of 2% with 3 month review time. Amortization of 15 years. How does it work ?

(or) any other scenarios for which the transfer to new buyer at the same interest rate is possible ? If so, what are the interst/mortgage scenarios

There is no "rule" far a I know. It depends on whether or not your buyer is prepared to take it on. Some will, some won't. That's what I took from our conversation with our bank as we're getting ready to sell up and move out of the country.

What ever is written in the mortgage contract.

Often they can be transferred or paid off earlier with a penalty. The interest of the mortgage has to be factored into the selling price. A high interest mortgage can be an advantage for the buyer,0 as they can deduct more from their income.

Would it? I don't see how paying more in interest can lead to a gain, even if you offset it from your income. The tax reduction will always be smaller than what you paid extra.


I would go for lower interest mortgage any day...

A higher interest means a lower purchase price. Example.

Fair house value 1M. 50% financed on a 10 year remaining mortgage. Current interest rate is 3%.

1. Situation: Interest of mortgage to be taken over is 3%.
No discount in house value. Either pay 1M cash, or 500k cash and take over the mortgage.

2. Situation: Interest of mortgage to be taken over is 1%.
This is a discount of CHF 100'000 in interest over 10 years (compared to current rate).
House purchase price can be adjust accordingly. Like you either pay 1M cash, or pay 570k cash and take over the attractive mortgage. Draw back, you can also only deduct CHF 5000 in interest. Hence, why they only have to pay 570k instead 600k.

3. Situation: Interest of mortgage to be taken over is 5%.
This is a penalty of CHF 100'000 in interest over 10 years (which has to be paid to the bank if the mortgage is paid back before maturity). House price has to be lowered, such that it becomes attractive. Like you either pay 1M cash, or pay 430k cash and take over the less attractive mortgage. The buyer can now deduct CHF 25000 in interest which lowers the tax considerably. Hence, why they have to pay 430k instead of 400k. In addition the seller will profit from a reduced real estate profit tax, as they sold the house for 930k instead for 1M.

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Then what you meant to say was that a high interest mortgage is an advantage for the buyer as he can use it to negotiate the house price down, not because he can deduct the high interest from taxes. While the buyer can deduct a part from taxes in the future (with additional risk mind you, in case his income goes down), he would mostly have to offset the loss through a lower sale price from the seller. Not great a proposition for the OP who is thinking about his selling position.


Overall, high interest rate benefits only the bank. Neither the seller or the buyer gain any advantage, the loss will be spread between them somehow