Join our investing community

Selling home bought with home loan

Discussion in 'Accounting, Tax & Legal' started by pearls, 11th Oct, 2012.

  1. pearls

    pearls Member

    Joined:
    20th Aug, 2012
    Posts:
    17
    Location:
    qld
    Hello,


    I bought a unit last year and have home loan against it, I have not made any extra re-payments but paid the weekly repayments on time. so, the loan is sitting at the same figure at that time I took. Now, I want to sell the unit, is it possible to sell with home loan against it or is there any obligation that I should clear certain percentage of home loan (say 20%) before I sell??

    Kindly advise

    Regards

    Rachel
     
  2. Simon Hampel

    Simon Hampel Co-founder Staff Member

    Joined:
    9th Jun, 2005
    Posts:
    4,619
    Location:
    Sydney, Australia
    I don't think we have assignable mortgages in Australia yet - this is common practice in the US I believe.

    Here, the loan will generally be tied to the asset that secures is such that if the asset is sold, the loan must be paid back in full.

    The property is used as collateral for the loan - without the property to secure it, the bank will not allow the loan to exist.

    There is no obligation to pay down part of the loan before selling - however, if the sale proceeds are not enough to cover the outstanding loan balance, you will still be expected to pay any amounts left over as soon as the sale settles.
     
  3. pearls

    pearls Member

    Joined:
    20th Aug, 2012
    Posts:
    17
    Location:
    qld
    Thanks Sim for the very clear explanation.

    I really appreciate your answer.


    Many thanks

    Regards

    Rachel Pearls

     
  4. Terryw

    Terryw Well-Known Member

    Joined:
    9th Jun, 2006
    Posts:
    653
    Location:
    Sydney
    You must discharge the mortgage to sell. This means, usually paying out the loan. But if you are buying another property or if you have another it may be possible to just switch the security of the mortgage to that property.