What Happens To Your Mortgage After You Sell Your Property?
The majority of Australians who sell their house do not own their home entirely. Therefore, knowing what happens to your mortgage after selling a property is important.
How Your Mortgage Works
When you initially obtain a house loan, your bank places a mortgage on your property.
The mortgage appears on the property title because the lender has a legal interest in the property. If you do not meet your repayments and default on the loan, they can commence legal proceedings to recover the loan. This may include selling your house.
Arranging Your Mortgage Discharge Before Settlement Day
The process of discharging a mortgage might be lengthy. As a result, it's critical that you begin the process of arranging your mortgage discharge as soon as you know the settlement date of your home. Speak with your conveyancer as well as your lender to ensure you have all the necessary information and know precisely what you need to do and when.
Once you have completed your discharge of mortgage application, your lender will be in contact with your solicitor and will make the appropriate arrangements. At settlement, they will collect any money owing to them, and the lender will file a discharge of mortgage with the land titles office in your state or territory.
Depending on your lender and the conditions surrounding your mortgage, discharging a mortgage may incur additional expenses. Some lenders may also charge borrowers a fee if they pay off their mortgage early than agreed, and these costs will be added at settlement.
If the amount you owe the lender is not covered by the proceeds from the sale, you will need to cover the shortfall.
What Happens Next?
Your conveyancer should inform you of any overdue rates and fees owed to other parties, such as the real estate agent who sold your home.
If you are not purchasing another property simultaneously, any remaining funds will be deposited into your bank account. If you are buying another property and have scheduled a simultaneous settlement day, any money payable to you from the sale of your current home will be applied immediately to the purchase of your new home.
Trust a Professional Team
It is important to engage a professional team when dealing with financial issues in relation to property sales and purchases. With the right team, your interests will be best looked after.
For more information, do not hesitate to contact our experts at Nazarian Law.