When buying a property, it is common to use a bank to contract a loan to finance this project. However, the vagaries of life sometimes call into question these projects. But what to do when you have to sell your property without having finished paying your mortgage? Explications!
What conditions to fulfill to sell your home with a credit in progress?
Resell a property while the credit associated with it is still in progress is quite possible and even very common. Change of geographic area, too much work to perform, difficulty repaying its monthly payments (although in this case solutions such as the purchase of credit are to consider before proceeding to the resale of the property), the reasons are not lacking!
To start, you should know that there is no specific deadline to be respected after the purchase of a good on credit to resell it. Beware, however, if the borrower is customary of this type of operation, the tax authorities may consider it as a merchant of undeclared property and the bill may be salted.
However, if certain specific devices have been put in place, they must be taken into account before reselling the property. For example, property affiliated Pinel device (which allows to obtain tax reductions in exchange for a rental of the property over a period of time) will no longer benefit from this tax deduction in case of resale.
The cost to foresee in case of resale financed by a credit in progress
Reselling a property financed by a credit still in progress represents a significant cost. It will therefore be important to calculate the amount of costs incurred before making a decision.
The costs of the purchase procedure, notary fees, agency fees and acquisition costs represent a significant cost that will be lost in any case in case of resale. Faced with the variation of real estate prices, it is not certain that the resale allows to recover its starting bet, quite the contrary. In addition, if the situation requires that the sale be made quickly, the tendency will generally be to revise the price down.
Finally, selling a property for which we will still have a real estate credit in course necessarily involves using the money from the sale to repay the credit in progress and thus pay off its debts. To sell off your mortgage sooner than expected will also mean paying a prepayment fee called IRA. The conditions and the amount of his penalties will be systematically described in the contract that was signed upon acceptance of the mortgage. The cost may vary from one institution to another and is often a percentage of the total amount awarded (maximum 3%).
Proceed to the sale of a property while the credit that helped finance it is still in progress is often an expensive operation. If possible, additional costs must be factored into the selling price of his property so that the latter can finance the entire repayment due to the lender. However, if this price is not in agreement with the realities of the real estate market, the sale will be difficult.
Transfer an existing housing loan to another project
Another option will be to transfer the current home loan on the financing of a new project. This will allow you to sell your property and have additional capital to start a new project. Beware, however, it is extremely rare that a bank accepts this type of transaction if it is not a transaction for a new real estate purchase. Indeed, the property used as collateral for the loan is an essential element for the transaction to be sufficiently secure for the lending organization. However, if the financial situation of the borrower has changed and their repayment capacity has changed, the bank can refuse this type of operation.
In short, it is quite possible to sell a property associated with an ongoing mortgage, but the borrower will be difficult to win this type of operation, so the purchase of real estate will have to to be a carefully considered and thoughtful decision.