Assumable Example:

  • Joe wants to sell his home for $495,000 and has an assumable $400,000 loan at 4.7% interest. Mark wants to buy Joe’s house. Mark has to put down $95,000 (plus closing fees) to take over Joe’s house and mortgage.

Low-down/assumable mortgages are very rare nowadays, but they are out there. A homeowner with an assumable loan can "hand off" the loan to a buyer instead of paying it off using proceeds from the home sale. This is of benefit to some homeowners who may be facing hefty penalties or closing costs if they try to pay off their mortgage early. If rates are low and you can get your choice of property by assuming the existing mortgage, by all means try.

  • Pro: Reduces monthly payments and saves money on closing costs.
  • Con: Now requires qualifying in most cases

Assumable Mortgages

Assumable Mortgage: A home buyer's ability to take over a seller’s mortgage when purchasing a home

2011 UPDATE: Increasing mortgage fraud and the banking and market collapse and subsequent recession in 2008 has resulted in most banks now requiring that home buyers must qualify to assume an exsisting mortgage.

Although some properties may still state "No Qualifying," this is on condition of the bank/lender confirming the assumability of the property once the offer is made. There are no guarantees. Seller Assissted Financing programs are available from some private lenders or property investors. These are sometimes advertised in the Classifed section of the Calgary Herald or Calgary Sun.
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