When it comes to selling your Barrie home, the following question often comes to mind: What will happen to your existing mortgage when you sell and are there any costs to breaking a mortgage?

 As a Barrie homeowner, you most likely have been paying a mortgage loan ever since you bought the house. The word Mortgage actually comes from the Spanish word ‘Mort’ or translated ‘Till death’! The borrower, that’s you, gives the Mortgage and in return you receive some remuneration, I.E. Cash. The Lender holds your debt (Mortgage) until you either repay it or you become deceased,(Mort). In English, it is basically a loan obtained from a credit institution such as a bank or lending company to help finance the purchase of a home as part of a buying agreement. During the term of the loan and over time, the outstanding loan (Debt) will become significantly lower due to consistent monthly repayments.

Bear in mind that the longer the period you agree to take the loan for, the lower the monthly payments will be, however, the longer the period the more of your monthly payment will be structured as interest repayments and not prinicple repayments. The amount of principal repaid over the first 5 years is really very small. Consult wisely with a mortgage professional before taking longer dated amortization periods.

 When you finally decide to put up your Barrie home for sale in the market, you will still be servicing your mortgage balance. What actually happens to the mortgage when you sell the house? First of all, the institution that you obtained the loan from will receive the outstanding amount due to them through the sale of the house. You would then be receiving the balance for yourself after closing costs have been paid. the closing costs consist of Realtor and Lawyer fees as well as disbursements, taxes and some other minor fees. For example if you manage to sell your house for $300,000 and your outstanding mortgage at the time is $250,000, then the balance of $50,000 less any fees will be your balance from the sale. It is important for you to properly understand the amount you will receive from the sale. The Hocking Homes Team can help you work out these numbers ahead of time to ensure that it’s viable for you to sell. If you have a negative balance, or you think you might have a negative balance it is imperative to speak to us before you even think about listing your home. We may be able to suggest some ways to still be able to sell your home. 

Depending on the type of mortgage you signed up for, ending a mortgage early can still be costly, especially if you have a lot of equity built up in the property. Most Barrie Real Estate  mortgages these days set a penalty fee for early redemption. This is a deliberate set up to try and keep you as a mortgage customer. this can be particularly true if you try to break a mortgage during the early years and the interest rate that is now on offer is lower than the one you have on your mortgage. Consult with a Mortgage Broker or your lending institution before you sell your home to ascertain any fees that might be attributable.  

These creative loan terms usually restrict you from selling your house within the first few years of ownership and if you break the condition, you will be imposed a penalty of a preset amount. Check your mortgage agreement for more details. When you take out a loan, always read the terms and conditions properly since this can vary from one bank to the next.

 During the process of your Barrie  home sale, your mortgage will be the first to be paid off. If you need to know any more information about your mortgage and selling your house, please don’t hesitate to get in touch. If we cannot answer your question we know someone who can. Expert advice is never costly, free advice from friends typically is! By the way, we don’t charge for expert advice and neither does your lender! We are just a call away,

Ian & Caroline Hocking

Tel 705 252 7939

Filed under: BarrieBarrie Real EstateDistrictEsssaMortgage InformationOro MedonteSpringwater

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