How do I sell if I still have a mortgage?
Can I sell my home while still paying a mortgage? Here’s the fast, legal roadmap you need.
Quick answer
Yes. You can sell while you still have a mortgage. The lender must be paid at closing. The sale process just needs planning: get a payoff amount, confirm penalties, and arrange any bridge funding if needed.
Step-by-step plan to sell with an existing mortgage
- Get a mortgage payoff statement. Contact your lender and request a written payoff figure valid for the expected closing date. This number includes principal, interest, and any discharge or prepayment penalties.
- Calculate net proceeds. Subtract the payoff, realtor commission, closing costs, and legal fees from your expected sale price. This tells you whether you clear enough to move forward.
- Check options with your lender. Ask if you can port the mortgage to a new property, transfer it to the buyer (assumption), or pay it off early. Some lenders waive penalties under certain conditions.
- Consider bridge financing. If you’re buying before you close, a bridge loan covers the gap between purchase and sale. Compare rates and fees—only use it if it makes sense financially.
- Price and market strategically. List price must cover the mortgage payoff and costs. Work with an expert who positions your home for multiple offers to reduce time on market and avoid low bids.
- Accept offers and close. At closing, the lawyer pays the lender the payoff amount. Any remaining funds go to you.
Costs and pitfalls to watch for
- Prepayment penalties: Ask the lender for the exact fee. It can be fixed or a percentage of the outstanding balance.
- Discharge fees and legal costs: Budget for the lawyer’s fee to clear the mortgage.
- Shortfall risk: If your sale price won’t cover the mortgage, you may need a top-up from savings, negotiate with the lender, or explore a short sale.
- Timing mismatch: Long gaps between offer and closing can change the payoff amount. Use accurate dates.
Alternative solutions that work
- Port the mortgage: Move your existing mortgage to the next home if your lender allows it. Keeps your rate and terms.
- Mortgage assumption: The buyer takes over your mortgage. This requires lender approval and works best if your rate is below market.
- Short sale: If market value is below your mortgage, negotiate with the lender to accept less than owed.
- Carry-back mortgage or subject-to deals: Complex and risky. Use only with experienced counsel.
How a local expert helps
A local, experienced realtor coordinates lenders, lawyers, and buyers to reduce surprises. They get accurate payoffs, price for net proceeds, and recommend bridge or assumption options when appropriate.
To discuss your exact numbers and get a clear sell-with-mortgage plan, contact Tony Sousa—top local expert in the Toronto market. Email: tony@sousasells.ca | Phone: 416-477-2620 | https://www.sousasells.ca
If you want a no-nonsense payout estimate and step-by-step checklist tailored to your mortgage, reach out today.
