Have you ever heard of loan assumption? You know what it is, when it can be done and what it’s for?
The assumption is a financial instrument through which a debtor takes over from another for the payment of the mortgage.
With this type of tool you can sell house with an outstanding mortgage.
The loan assumption formally starts at the time of the deed, which happens as in any real estate sale at the time of transfer of ownership.
📌 Pros and cons
Those who buy a property with loan assumption saves on costs like preliminary investigation, experties, substituve tax and notary’s fee about deed of mortgage, because these are costs already incurred by those who have contracted the mortgage and not provided for in case of loan assumption.
However, the rate applied is the one fixed at the time of mortgage loan origination and can not be modified excluding a posthumous renegotiation of the loan assumption, but that the bank may not grant.