Mortgage Minute: Your Questions Answered

Date Posted: November 24, 2022

Q: We are thinking of selling our home next summer as we approach retirement and downsizing to a condo. We have a small mortgage on our home and the maturity is in March, once we sell and downsize, we won’t have a mortgage but need to decide what to do in February, any advice?

A: Open mortgages are 7/8/9% on open mortgages – if the mortgage is small, then I would go for a variable rate mortgage and if you have some cash sitting on the outside, you can apply that to your mortgage with your prepayment privileges to get that principal down quicker.

Q: I bought a house in August 2020 and took a 5-year mortgage with a rate of 1.79%, I have just been transferred to the US and will need to sell my house, will my lender allow my purchaser to take over my mortgage as with todays rates? I would think it would help me sell for top dollar.

A: Of course, you would have people salivating at the 1.79% - the vendor just needs to acknowledge that you are still responsible for that mortgage until your renewal happens. The buyer could assume your mortgage however, if there were anything to go wrong, the law states that it would fall on to the mortgage holder.

Q: We are selling one of our investment properties and a prospective buyer asked if we would consider a vendor take back mortgage, are there any risks to this?

A: We are seeing more of this only because it’s much more difficult to qualify with high rates these days. You need to be careful if you’re the vendor because you are taking all the risk. If property values are to depreciate, then you’re the last 20% that gets paid, people could just walk away from the property and now you would need to sue them to get your money back.

For more information, reach out to a Mortgage Broker today!

To watch the full CTV Morning Live segment with Frank Napolitano; click here