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Sell mortgages property?

Indiana

Well-known member
Feb 23, 2010
1,883
60
48
I’ve only ever sold fully owned properties.
What’s the procedure or any pain in selling a property you still have a bank mortgage on?
 

farquhar

Active member
Jan 25, 2019
437
37
28
I’ve only ever sold fully owned properties.
What’s the procedure or any pain in selling a property you still have a bank mortgage on?
The penalty; is your mortgage fixed or variable?

If variable, the penalty is 3 months interest. Very simple.

If fixed, the penalty is the greater of 3 months interest OR interest rate differential (IRD)

This is how IRD works. Let's say you got a 5 year fixed, but sell in year 2. You are breaking your mortgage 3 years early; the Bank takes a 3 year fixed rate , calculates the difference in interest between the 3 year fixed rate and your rate, and that is your penalty (if is higher than 3 months interest).

The Banks tend to fuck people hard on IRD, as the rate they use for your mortgage is not the rate you actually pay which you negotiated, but the bullshit posted rate which nobodys pays. IRD penalties can be in 5 figures.
 

farquhar

Active member
Jan 25, 2019
437
37
28
I’ve only ever sold fully owned properties.
What’s the procedure or any pain in selling a property you still have a bank mortgage on?
If you have prepayment privileges and you have the cash, you have to make your prepayment first before calling your Bank for the payout in order to lower your penalty figure.
 

farquhar

Active member
Jan 25, 2019
437
37
28
I’ve only ever sold fully owned properties.
What’s the procedure or any pain in selling a property you still have a bank mortgage on?
Also, you may have a hybrid product which is Mortgage + Home Equity Line of Credit (HELOC); as you pay off the mortgage, the Credit Limit on the HELOC goes up.

Since both products are secured by the same Collateral Charge, the HELOC has to be paid out at the same time.
 

Darts

Well-known member
Jan 15, 2017
6,392
250
83
I once had a mortgage whose interest rate was below the then current market interest rate. I wanted to prepay the mortgage and the mortgagor still wanted to charge me a prepayment penalty.

I tried to convince the mortgagor that he could take the money from my prepayment and re-invest it at the then higher current interest rate.
 

clules

Member
Jul 6, 2002
389
8
18
Toronto, Ontario
When I sold my condo and bought my house, I was able to port the balance of my condo mortgage to my house with no penalty. I was also able to negotiate better rates for the new mortgage.
 
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