When you purchased your property, the first person with whom you sought assistance was your mortgage loan adviser. It was through him/her that you were educated regarding the rudiments of mortgage loans and what type you should choose so that you won’t end up having any difficulty in meeting your monthly obligation (i.e., amortization payment).
However, there will come a time when you might decide to buy another property – for business purposes, for instance – and this would be an addition to your current mortgage payments.
You, then, opted to transfer your first mortgage contract to a family relative so that the monthly payments on the first house would not be discontinued. Not only are you able to manage your monthly settlement but also able to “assign a new owner” to your property.
But is this possible? Can you just elect someone to take care of your house and eventually transfer your mortgage contract to that person? Are there any negative implications regarding this move to port over your mortgage loan?
In this blog, we are going to discuss briefly why transferring a mortgage is not possible except for a few instances that we will cite.
Mortgage Transfer Defined
We will deal with this term concisely: it is a re-assignment of an already existing housing loan to another individual (i.e. friend, close relative, etc.) or another entity (i.e. company, agency, etc.)
Theoretically speaking, mortgage transfer entails everything shouldered by the new holder of the mortgage contract. Moreover, if the agreement is an assumable mortgage then the law allows such a transfer to take effect.
This means that the new owner will assume or take over the payments of the current mortgage loan balance using the same rate (i.e. original rate) that was given to the previous owner.
Any legal implication that the initial owner had with the contract is severed immediately. This means that the former holder of the contract and owner of the property is no longer liable as mandated by law.
If you are musing about doing a mortgage transfer then we suggest that you have a consultation with an experienced mortgage advisor for better mortgage options Canada can offer you.
Mortgage Transfer: Mission Impossible or Not
Ethan Hunt® of Mission Impossible™ will have a field day with this one. I can already hear him say, “Show me a husband who can port his lovely wife and I’ll take ownership of your grand mansion in a blink of an eye!”
It is not possible to transfer your mortgage because of the nuances that your contract carries. Your agreement is unlike a bank cheque in that you can transfer ownership to virtually anyone and not be
burdened with anything at all (provided, of course, that the negotiable instrument is clean but this is an entirely different subject and topic altogether).
Only assumable loans like FHA, VA, and USDA loans are allowed for mortgage transfer as long as it meets certain conditions or criteria.
If you are intent on pursuing this then we advise that you get a second mortgage loan instead. It is much easier to deal with and more practical for you and your family to consider.
Conditions that make Mortgage Transfer Acceptable
There are acceptable circumstances that can make the transfer of mortgage viable and these are the following:
a. Death either of a spouse, relative, or joint tenant/partner
b. Transfers between members of the family (i.e. spouse and/or children)
c. Separation or divorce agreements as mandated by law if the other partner/spouse decides to continue living in the house
d. Trust arrangements (living) wherein the beneficiary is the borrower
Alternatives to Mortgage Transfer
In light of the issue regarding the transfer of mortgage, there are other means to achieve re-assignment of property ownership such as:
a. Purchase of home by a new owner from the previous owner using a new mortgage loan contract
b. Adding a name on the original mortgage loan agreement (if the lender will allow it)
(NOTE: Alternative (b) is disadvantageous because the owner still has control over the mortgage payments; hence, the addition of another person will only complicate matters instead of alleviating them.)
Applying for a home mortgage requires a lot of thought and careful research to make your dream property purchase easy to accomplish. Complimented with satisfactory credit scores and financial liquidity, your house-hunting project can be an exhilarating experience worth going through.
Final Thoughts
Transferring your mortgage is not possible unless specific circumstances are in force that will allow this transaction to commence. You are responsible for your property and everything that comes with it.
Re-assigning your mortgage agreement to someone else is not only risky but also uncalled for since the loan contract is fixed – that is – it is between the lender and the borrower (no second or third parties involved).
If you are intent on having your mortgage contract settled then you can opt to sell your house to a new buyer instead.
A reputable mortgage advisor is your key to understanding how your mortgage loan agreement behaves. We strongly suggest that you do some research on your dream property and be familiar with your lender’s conditions and terms to avoid future hurdles.
We are your best mortgage solutions provider in Canada founded by Faizal Garasia in 2019. We have a network of more than 90 lenders including the largest banks, credit unions, trust firms, and financial institutions across Canada.
Contact us at (416) 825 0142 or send an email to faizal.garasia@dominionlending.ca today for more information.
