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How to Transfer a Mortgage Loan to Another Person

If you are reading this article, then you most probably want to know whether you can transfer your personal loan to someone else. The bad news is it is not easy to find the answer since it is highly unlikely that a personal loan transfer can happen. 

Here’s why it is so difficult. 

A personal loan given to you by a lender is dependent on your individual eligibility criteria, which the next person may not fulfil. Thus, from the lender’s perspective, it is unfair and thus not possible. For instance, the loan was given to you because you can repay on time. The person you want to transfer this loan to may not have the repayment capacity. And that makes it so risky for a lender or bank. Similarly, the interest rate and amount given to you may not be suitable to the other person.

If such a loan is transferred to a new person, the loan terms and conditions shall need to be changed to suit the new person’s needs and eligibility. Thus, personal loan transfers are not generally allowed. 

That being said, there are two types of personal loans that can be transferred.

These are:

  1. Car loans

  2. Mortgages

Why transfer a mortgage?

There can be many reasons for why you wish to transfer your mortgage to someone else. Perhaps you wish to sell your home or the party with whom you have a joint mortgage wishes to remove their share. Whatever your reason can be, here are 3 ways of transferring your mortgage.

Transfer is made possible by the bank only if they find the new borrower eligible and capable of repayment as well.

  1. When you are selling your property: In case you are really selling off your home and have not yet paid the mortgage, you can then transfer your mortgage to another person. Yes, that’s totally possible! Such a person can do two things: take your mortgage with your lender, or take a loan from a new lender to pay off your lender. In both ways, you shall be paid back with the money you have given for mortgage repayment. 

  2. When you want to sell off your share of a joint mortgage: This can be a bit difficult for anyone. When you transfer your mortgage from a joint mortgage to a sole ownership or sole mortgage, it is called Transfer of Equity in legal terms. The only way it is possible is if the bank believes the other person can repay on time. The new borrower can take the aid of a mortgage broker to lengthen his/her repayment period, or alternatively, find a new lender.

  3. When you want to erase your name from a joint mortgage: This is possible as well with a transfer of equity. In case the co-mortgage holder has no intention to buy your share of mortgage, you have other options. You can rent out your property or sell your property’s share to a new buyer. 

Here’s how you can transfer your mortgage

Considering that you are the property’s owner:

  1. The buyer will be requesting you to provide the letter showing your loan is being foreclosed in lieu of selling of the concerned property.

  2. The buyer needs to fill up the home loan application form and give the processing fees

  3. One needs to get a NOC or No Objection Certificate from the developer

  4. The buyer now needs to provide all the required KYC documents as well the required income proof documents.

  5. An evaluation team shall be sent by the lender to evaluate the concerned property to decide its value.

  6. The buyer shall be disbursed the sales consideration as the amount of loan. You as the seller shall get a cheque from your lender. 

  7. Finally, you’ll transfer photocopies of all property-related documents to the buyer. The original ones shall be sent to the lender.

 

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