Fixed-rate mortgages with a life of eight to ten years do not cost much more than two or three-year mortgages. However, many owners do not want to commit to such a long term – even if there are indeed solutions to remain flexible.
Whether you built your house yourself or not, eventually, the needs and circumstances of the people who live there may change. A young family may have to move for professional reasons; an elderly couple may wish to exchange their large house for a smaller apartment, once the children are out of the nest. If necessary, there are solutions when a fixed-rate mortgage is still in effect at the time of the sale. Of course, they are not free, however, you benefit in the long term from low rates if you keep your accommodation in a property.
Option 1: Transfer the mortgage to the new object
If you sell your house or apartment to buy a new place of accommodation elsewhere, you can usually transfer the mortgage.
Option 2: Transfer the mortgage to the new buyer
The more interested a buyer is in an object, the more likely you are to motivate them to take over the current mortgage. If the bank gives its approval, this solution is often advantageous for both parties: the seller does not pay any penalty for early termination and the buyer obtains a mortgage, perhaps even cheaper than if he had to conclude a new one.
If the current interest rates are lower than that of the fixed-rate mortgage that you wish to transfer, as a seller, you fairly compensate the buyer for his additional expenses. If the market interests are higher, the buyer anticipates some gain, which is your opportunity as well to negotiate a better deal.
Option 3: Terminate the mortgage early
If you have not taken option 1 or option 2 into account, most banks allow you to cancel your mortgage at a fixed rate when the object is sold. Important: here too, termination periods apply in many cases. When a fixed-rate mortgage is terminated early, the bank places the money elsewhere for the remainder of the mortgage term. If the investment income for the remainder of the mortgage term is lower than the agreed mortgage interest rate, you must compensate for the loss. If, on the contrary, the money can be placed on better terms, you generally receive a dissolution indemnity. Right now, you will most likely have to compensate the bank. And it can be very expensive.
If you are unable to find the right solution, then instead of putting extra stress on your mind, you should get in touch with PIF Lending, a company that has a vast experience in a home mortgage. Let experts guide you in the right direction so that you can get rid of the home mortgage along with saving some money for your future as well.