Why Assume A Mortgage? Calgarians Talk
My most popular posts on Mortgage Calgary are consistently about assuming mortgages. There doesn’t seem to be a lot of good information about assumables – I assume because the banks and mortgage lenders aren’t so hot on them.
Looking for first-person stories of people who had assumed mortgages in Alberta, I put out a call online:
Wanted: Your experience assuming a mortgage
I am looking to hear buyer and seller experiences in mortgage assumptions. If you are willing to share your experience with assumable mortgages – drop me an email.
I have posted the responses below, with personal details withheld.
“Not much of an experience to discuss, buyer paid cash to mortgage, i transferred title and mortgage, done deal.”
“Every single home that i sold i made it an assumable mortgage. I’ve had no problems so far yet. it makes selling the home more easier. Now when i look for properties to buy i look under the assumable section that my Realtor set up for me.”
I followed up that response with some questions, curious about the reaction to an assumable the other parties involved had (banks, brokers, lawyers):
“My lawyer has not had any problems with assumable properties. The reason why I let people assume my mortgage is because its easier to sell the property, not every one can qualify for a mortgage of lets say 3500000, but they have the money to put down as a deposit. In other words you can say you are acting as the bank. It’s like investing money in rsp. You have the ones that grow very little in interest with no worrying about the market. or you can earn lots of interest but there’s risk involved.”
Assumable Mortgage Can Go Bad
I received this word of warning about assumable mortgages through my inbox:
“The person who was granted and approved for the mortgage will be responsible for the payments of this mortgage for 1 year after selling their house. This means a person with no down payment can walk in, make no payments and live for free. You won’t even know the mortgage is delinquent till about 3 months after no payments are made; then your credit is screwed up, it will take a lot of legal wrangling to get the new owners out, all the while no doubt your place will be a disaster.
People who have a good size down payment are different; they have something to lose, beside the fact they have been able to save money, a sign of better financial ability.
Just had someone try this on me (no down assumable) but I have no mortgage on my property, so they tried rent to own. In nearly 5 months time they owed almost 4 months rent!!! Imagine they get the no down assumable! Could be a scam to sit a year for free, or people just unable to make payments; either way you can be really out of luck.”
Have you bought or sold using an assumable mortgage? If you have any experiences you’d like to share, please leave a comment.