When it comes to selling your Ottawa condo, the following question often comes to mind: What will happen to your existing mortgage when you sell your condo?
As a Ottawa condo owner, you most likely have been paying a mortgage loan ever since you bought the condo. Here is a short definition of a mortgage. It is basically a loan obtained from a credit institutions such as banks or lending companies to help finance the purchase of a condo as part of a buying agreement. During the term of the loan and over time, the outstanding loan will significantly lower due to consistent monthly repayments.
When you finally decide to put up your Ottawa condo for sale in the market, you will still be servicing your mortgage balance. What actually happens to the mortgage when you sell the condo? First of all, the institution that you got the loan from will receive the outstanding amount due to them through the sale of the condo. You would then be receiving the balance for yourself. For example if you manage to sell your condo for $300,000 and your outstanding mortgage at the time is $250,000, then the balance of $50,000 will be your profit from the sale. It is important for you to properly understand the amount you will receive from the sale. It does not make sense to sell your condo if you will have a negative profit or a small sum as profit.
Depending on the type of mortgage you signed up for, ending a mortgage early can still be costly, especially if you have a lot of equity built up in the property. Most Ottawa mortgages these days set a penalty fee for early redemption. This is a deliberate set up to keep you as a mortgage customer. This lets the bank recoup a specific amount of interest in the beginning. This is normally set for a couple of years and will depend on the length of the loan period. This way, you get locked into the loan and the credit institution can earn its profits.
These creative loan terms usually restrict you to selling your condo within the first few years of ownership and if you break the condition, you will be imposed a penalty of a preset amount. Check your mortgage agreement for more details. When you take out a loan, always read the terms and conditions properly since this can vary from one bank to the next.
During the process of your Ottawa condo sale, your mortgage will be the first to be paid off. If you need to know any more information about your mortgage and selling your condo, please don’t hesitate to get in touch.
HomeLife Capital Realty Inc., Brokerage*
