Can someone takeover someone else's mortgage?

Question

Hi, this is interesting! I'm trying to use some creative Financing, so I wonder can someone takeover someone else's mortgage? I mean for example; I bought my property last year for $100,000 and I put down $25,000 down. My monthly mortgage is $360. Can someone approach me to takeover my mortgage and continue paying my $360 a month and pay me my downpayment plus $10k or whatever?!

If that is so, who would you need to be on your team for such a transaction being in the buyer's shoes; Accountant, Attorney...or who would do the financing to make sure the transfer goes right and clean?

Any thought on this scenario, if someone did similar transactions? Thanks

Brooks Rembert · Answer

@Michael Ramzy Yes. It's called a "Subject To" transaction. You can search Subject To and find more than you can imagine here on BP.

Fred Heller · Answer

Not sure how they do things in Canada but most mortgages in the US have a due on sale clause, which means that whenever you convey the ownership interest in the house to someone else, the mortgage accelerates and becomes due immediately.

Michael Ramzy · Answer

Seems like that! @Rachel  H. Thanks

Gary McGowan · Answer

This info based on Ontario Canada rules.

Short answer is yes.  This called an Agreement For Sale.  Highly popular in the seventies around the Toronto area. Due to lenders not lending, high rate mortgages and properties no selling. I only know of two lawyers in the area that will even have the conversation about them now.  Most lawyers have never heard of them and when explained won't touch them.

The concept is ownership of the home transfers but title does not until sometime down down in the future. Usually when the mortgage is up for renewal. The original owner remains on title and keeps the mortgage in his name.  Not many sellers are keen to do that especially in a hot sellers market.

On the flip side about 1/6 of mortgages are assumable providing the new buyer qualifies for it.

Brian Gibbons · Answer

@Michael Ramzy

I coach subject to and you never sell on subject to, ever.

Subject to is where you buy turns and promised to make the payments but the seller keeps the loan in their name

Look at selling on lease purchase where you get a large down payment and you put into a lease with the tenant buyer. If the tenant buyer defaults and doesn't buy, you keep the earnest money

If you're in Canada see a Canadian commercial attorney that specializes in leases

Michael Ramzy · Answer

thanks @Dave Vogt. That's true.

Dave Vogt · Answer

@Gary McGowan I had a bit of a laugh when I read your post...I just went through the 3rd phase of my real estate exams and they actually had two questions on Agreement For Sale. With OREA on our side teaching agents how to buy and sell properties, it's no wonder there is only a handful of agents who actually know and understand investing, flipping, and the like.

I've flipped houses with some pretty creative financing in my 10 plus years and assuming a mortgage was only one of them. I even did one on a rent to own until I finished up a flip. Once I started working on the rent to own I had my private money guy come on board to prevent any issues with insurance etc. as a flip can get messy if you don't.

The one thing I can say for sure is that the rules in Canada are much different than the rules in the US and @Roy N. certainly seems to know his stuff when it comes to both. You've  received some good advise from everyone and the only thing I can say is take some time to think things over, but in order to really make anything happen you've got to take action. If you get shut down the first time, figure out another way. You'll learn regardless and push ahead to bigger and better things.

Nothing is better than real world experience...good luck!

Rachel H. · Answer

Yes, but you have to be careful. You're on the hook until the mortgage gets paid off. Best of luck!

Brian Gibbons · Answer

@Michael Ramzy

Yes the website has basics on lease options, sub2, wraps, land contracts, private lending, jv partnering, and more. (USA not CA)

Glad you like it!

Best wishes,

Brian

PS I have CA training too in case you want to learn there.

Michael Ramzy · Answer

Thanks @Roy N.

@Brian Gibbons I like your website! The fact that @Roy N. is recommending you, I've tried his recommendation before and it was great. Hinting @Gary McGowan ;)

@Brian Gibbons I'll PM you and check if there is something we can do in my scenario!

Thanks :)

Can someone takeover someone else's mortgage?

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