The mortgage loan transfer option
Posted On March 18, 2020
Buying a property does not mean that you will keep it for 20 or 25 years, traditional terms of a mortgage. The ups and downs of life (enlargement of the family, transfer, divorce, departure of children, etc.) reduce the length of time the property is held. For these situations, the “transfer” option can be interesting.
What is loan transfer?
The mortgage is closely linked to the property acquired. Normally the resale of the property, for whatever reason, results in the repayment of the initial loan. Even if you acquire a new property. Taking out a new loan changes the conditions.
Fortunately, there is a particularly attractive although little known option: loan transfer or transferability. It allows you to transfer , under certain conditions and agreement of the lender, the mortgage on the new property , while retaining the advantages of your loan (rate, insurance, guarantee, etc.)
What exactly does loan transfer do?
First of all, the “transfer” option exempts you from the prepayment costs generally due in the event of the resale of the property concerned by this credit. Only the processing fees for your file will be requested.
On the other hand, you can keep your current loan on the same conditions , which is particularly interesting when the rates are very low, as currently. On the other hand, if this loan does not fully cover the acquisition transaction, the “complementary” loan will be compulsory and under the conditions in force at the time the loan is taken out.
If you acquired your property a few years ago, when the rates were higher than today, the portability option will be of little interest to you. It will be cheaper for you to pay the prepayment fees to take out a new loan at a more attractive rate .
The transfer also concerns loan insurance, which you can keep with the same conditions, which is interesting when you know that the rate of insurance depends in particular on your age!
Last point. Transferability is at the discretion of the lending bank and the surety. It also depends on their conditions. We invite you to discuss this possibility during your meeting with the bank.