The steps and scenarios to sell a property vary depending on the situation of the same. The ideal context when choosing to sell is that the home for sale is free of charge. However, it is common for a property to have mortgage charges. Therefore, this time, we will focus on detailing each of the steps to follow to sell a home with a mortgage.
In a large number of cases, the owner of a home wonders if it is possible to sell the same to happen if they have not completed the mortgage payment. The answer to this question is positive and it is even a much more common procedure than it often seems.
The reality is that the transaction can be carried out in different ways and under different circumstances. Each of them will depend on the profile and situation of each seller and buyer. Therefore, it is convenient to analyze each of them so that you can choose the one that best suits your needs and preferences. We at nphp are here to help, so keep on reading!
Possible reasons to sell a house with a mortgage
A person assumes, when buying a house through a mortgage loan, a payment commitment that can extend up to more than 30 years. Throughout that period of time, many unexpected situations can occur and therefore the property owner decides to sell the property. The reasons, depending on the particular situation of each owner, are varied, among others:
- Having to change residence for a job change.
- Faced with the choice to move to another location.
- For having inherited the property.
- For a divorce.
- When the family grows larger and requires more space
Each of these situations can generate the need to change your home and, therefore, have to sell it. If the property is mortgaged, it is not a problem to carry out the operation.
Although it is possible to sell a house with a mortgage, it is necessary that you take into account what are the different possibilities and ways to do it.
How to sell a house with a mortgage?
First of all, in order to sell a house with a mortgage, it is necessary to take into account two situations:
The mortgage on the property for sale has not yet been paid:
- Faced with this situation, one of the actions is the payment of the remainder of the mortgage with the money that results from the sale. In turn, you have the possibility to subrogate the loan to the buyer.
- In the cases in which the money from the sale is used to cancel the mortgage, it is necessary to carry out the corresponding procedure to register the situation in the Property Registry. In most cases, this step is handled by the new owner’s bank. However, there is the possibility that you can negotiate to do it yourself and in this way save a sum of money.
- Sell a house with a mortgage by applying for a bridge mortgage.
The mortgage on the property continues to appear in the Registry although it has already been canceled:
- Faced with this situation, you must first regularize the situation of the mortgage in the Property Registry and then put it up for sale
Next, we describe each of the possibilities so that you can analyze what your situation is and the one that best suits your needs.
Sell your property at a price higher than what you owe for the mortgage
In this case we are talking about receiving a sum of money greater than what you owe to the bank. We are facing the ideal scenario since you will be able to cancel your debt and keep a rest of the money, but we must warn you that for this situation to occur, the real estate market must be in a very good moment.
If this is your case, you must follow the following steps:
- Confirm the sale price with the person who will buy the home. This must be higher than what is owed in the bank.
- Request a Certificate of Pending Debt, which is carried out before the bank with which the mortgage was acquired.
- Carry out the signature of the sale before a notary. In this step you must present the pending debt certificate requested in the previous step.
- Then, the buyer will issue at least two checks: one for you and one for the bank with which they have to pay off the mortgage and the interest on it.
Once the corresponding check has been presented to the representative of the bank and settled in debt with the payment received, the sale and cancellation of the seller’s mortgage can be carried out.
Sell your house at a price lower than what you have to pay to cancel the mortgage
Selling a house with a mortgage at a price higher than the same is the option that every seller would like it to be. However, it is not the most common. At the same time, like in ehsaas nadra program it is not a decision that depends directly on you, since prices fluctuate according to the real estate market and the economic situation that is being crossed.
In any case, you can sell your property through the following steps:
- Confirm the sale price with the person who will buy the home.
- As in the previous scenario, we must ask the bank for the Certificate of Pending Debt and then report the situation to know the new conditions that the bank will request when modifying the loan face. That is, you will have a personal loan. Therefore, the financial institution will look at your current financial solvency to resolve.
- After the sale is made, since it is a lower price than what you have left to pay off the mortgage, what remains of the debt with the bank will become a personal loan with which the remaining amount will be paid. In these situations, it is very certain that some type of commission must be paid to cancel the old loan and open the new one. This varies according to each bank.
Is it possible to subrogate the mortgage to a new owner?
In addition to the two options presented above, there is the possibility of selling the house with a mortgage by changing ownership of it. That is, subrogating the mortgage credit with the buyer. In this way, the cancellation of the mortgage will be the responsibility of the new owner.
Next, we detail the steps you must take to transfer your mortgage to the buyer of your home for sale:
- Agree with the buyer on the transfer of the mortgage and establish under what conditions the sale and subrogation of the mortgage will be carried out.
- Then, you must go to the bank together with the future owner and expose the situation to their representative.
- Next, the bank will carry out a study of the buyer’s profile in order to ensure their financial solvency and the assurance that they will be able to take over the loan without inconvenience.
- The next step will depend on what the bank solves. If you reject the request, there will be no choice but to change your alternative. However, in case you accept the application, the next step is to sign the mortgage subrogation. That is, change the ownership that will make the new owner responsible for the rest of the credit.
Can a home be sold through a bridge mortgage?
The last of the options to sell a house with a mortgage is through the application for a bridging mortgage. It is an alternative for those cases in which you want to invest the property money in the purchase of a new home.
It is not always possible for both operations to be performed at the same time. The application for a bridge mortgage can solve both the payment of the mortgage of the house for sale and of the new property, paying a lower value than the one that involves resorting to two separate loans.
If you choose this alternative, you must follow the following steps:
- First, you must request a mortgage from your bank for the purchase of your new home. In the same appointment, you must state that you want to apply for a bridge mortgage in order to facilitate the payment of the two mortgages.
- The bank will carry out a study of the case and will decide whether or not to accept the bridging mortgage. In cases where the application is accepted, you should consider that this type of mortgage is subject to a specific period. It can go from months to year, in which the first home must be sold.
- Throughout the period of sale of the house with a mortgage, what you will have to pay will be the payment of the bridge mortgage. That is, you will pay a slightly higher fee than the one corresponding to the mortgage of your property for sale, but less than the value that would mean paying the two mortgages separately.
- To sell a house with a mortgage, the bridge mortgage is canceled and it only remains to continue paying the second mortgage corresponding to the new property.
The mortgage continues to appear in the Property Registry. How to cancel it?
A possibility that is repeated many times is that the mortgage payments have been paid in full, but this situation is not reflected in the Property Registry. Here the main recommendation is to cancel the mortgage in the registry before selling the property. In this way, you will ensure that you can control each step and the exact cost of the cancellation, which can vary depending on the circumstances.
The value of the procedure may vary, since it can be done independently, through your bank or with the advice of a private agent. Doing it well in advance will avoid having to do it with the bank, which requires a large sum of money.
Another option is to go to an independent management agency. It is an alternative that can be cheaper and, in turn, you make sure to carry out the process safely and without inconvenience.
Who is responsible for the mortgage cancellation costs?
When selling a house with a mortgage, the costs of its cancellation will correspond to the seller. Knowing this step is of the utmost importance and the team of prime minister housing scheme loan always reminds their clients about this, since the charges of a sale are varied. In this way, you will be able to organize yourself in the best way by knowing exactly all the expenses that you will have to assume.
Just like when you do the cancellation process, you can do it yourself, let the bank or an independent agent do it. To figure out how you will carry it out, you must consider each of the possibilities. Since, going to the bank to an agency will demand a sum of money to be paid.