How to sell a house with a current mortgage
When and how it can be done
None of us, no matter how hard we try to plan the times and events of life, can predict what will happen tomorrow. Let alone ten or twenty years later.
Yet when we take out a mortgage to buy a house, we sign a contract that commits us even for longer periods, until the debt is finally paid off.
Over time, however, things change, and what was our dream home at the time of the deed may at some point prove to be unsuitable, too small or too big, too far from our workplace, too noisy because of noisy new neighbours or the newly started carpentry workshop next door...
The reasons may be the most diverse, but if we decide to change it, the question we all ask ourselves is the same: can I sell it with the current mortgage?
THERE ARE THREE POSSIBILITIES: THE CHOICE IS YOURS!
First of all, it is necessary to clarify the fact that taking out a mortgage does not entail any obligation not to sell. The bank has no title to the property and cannot prevent its sale. Instead, its task is to manage the financing until its final conclusion. Having said that, in any case, the first step is to ask the bank for a written statement of the amount of outstanding debt. Once this is done, there are three options from which everyone can choose the one that best suits them.
SUBSTITUTION OF COLLATERAL
If the intention is to sell the property in order to buy another, it is possible to transfer the mortgage on the old one to the new house, provided that the bank accepts the transaction by valuing the new property at the same or higher value than the old one.
TAKING OVER THE DEBT
With the bank's consent, the mortgage can be directly transferred to the buyer of the house with two formulas: the release assumption and the cumulative assumption. The former frees the seller from any obligation to the bank, while the latter binds the seller to repay the mortgage if the buyer is no longer able to pay.
EARLY REPAYMENT
This is the most widely practised solution, which is both simple and definitive. If the seller has the sum necessary to repay the mortgage before the deed is signed, he can obtain a receipt from the bank for the repayment and the cancellation of the mortgage. If, on the other hand, there is no such possibility, the extinction of the debt takes place with the money collected by the purchaser at the time of the deed: the purchaser himself pays the bank a cheque equal to the residual amount due in order to obtain the receipt and cancellation.
WHEN CAN IT BE DONE?
Second homes with a mortgage can be sold at any time, whereas first homes purchased with Prima Casa relief cannot be sold until five years after purchase. They can only be sold first if another property is bought as a first home, otherwise the reliefs are lost.
After this brief examination of the subject, we invite you to contact us if you are interested so that we can provide you with further insights and advice!
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