How To Avoid Mortgage Penalties - Selling Home - YouTube

the most important financial consideration when  someone is selling the home is the sale price  

of the home but in addition to this sale  price the other financial factors play an  

important role before even salah put their  home on sale one of the most important such  

factor is discharging the existing mortgage  whenever someone is deciding to list their  

home for sale they need to read the Terms  & Condition for their existing mortgage  

and they should meet up with their lenders to  understand how their mortgage is and how it's set  

when the seller has a fully open mortgage on  the current home that they're listing for sale  

they can use the proceeds of the sale towards  paying off their full mortgage without  

resulting in any kind of discharge penalties  but in case the seller has a fully closed  

mortgage on the existing home they cannot pay  off the full mortgage before the expiry of term  

without paying the discharge penalties and this  is usually a huge number in addition to the  

mortgage money there are many ways the seller  can avoid paying off these discharge penalties

first and the very common one is that usually the  seller lists their home for a sale only when the  

mortgage term is about to expire hence the sale of  a home coincide with the expiry of mortgage term  

other way of avoiding such penalties is by  allowing the new buyer of a home to assume  

sellers existing mortgage as is in some scenarios  seller can convert their existing mortgage into  

portable mortgage and transfer their mortgage  from front home to the new home that they buy

portable mortgage allows the seller to take their  existing mortgage and transfer it to the home they  

are buying this is highly beneficial in the cases  especially when the interest rate on existing  

mortgage is lower than the existing market rate if  the new home that the seller is going to purchase  

requires a larger amount than the existing  mortgage they can borrow the additional funds  

at the current market rates for example  let's assume the seller is selling their home  

they carries a three-year term mortgage of 50 000  as seven percent there are two years left on their  

term their new home will require seventy five  thousand dollar mortgage the portability feature  

of sellers mortgage enabled them to continue using  their seven percent mortgage for the first fifty  

thousand on their new home in a range for the  remaining twenty five thousand at the current  

market rate of eight point five percent for the  same two year term the resulting mortgage is a  

blend at seven point five percent to combine the  two year rate and the mortgage amount therefore  

resulting in a new mortgage for seventy five  thousand dollar at seven point five percent hence  

seller is able to borrow additional fund at a  lower rate for the remainder of the original term  

seller may offer the existing mortgage as  a zoomable mortgage to the new buyer as an  

attractive selling feature especially when  the interest rate of the existing mortgage  

are lower than the current market rates however  this assumability is totally dependent on lender  

on the other hand in state of Ontario law  states that name of the seller will not  

be removed from the mortgage until unless  the loan is paid off completely this means  

if the buyer defaults on the mortgage the lender  has the right to pursue the seller even if he's  

not the owner of the house anymore let's say  for example buyer is buying a house for 150 000  

and the seller's existing mortgage on the home is  10 10 000. in order to complete the transaction  

buyer has agreed to pay 40 000 in cash  to the seller and assume 110 000 mortgage  

from the seller therefore they don't have  to arrange financing from any another source  

in order to buy the home i hope you would have  liked the information that i shared in this video  

please comment below and let me know if it  helped you in any way I'm Aman, I'm a licensed  

realtor here in Ontario and i specialize in  buying and selling residential properties