Assumable mortgage – is it right for you?

An assumable mortgage is a mortgage which is passed from the previous owner of the home to the new home owner. It means exactly what it is called. You “assume” the mortgage as it is. This can be advantageous to the new owner if the interest rate on the mortgage is lower than current rates or if your credit rating has been bruised or even non existent through unfortunate circumstances.

However, the mortgage terms, payment frequencies and pre-payment option remain the same as when the mortgage was first set in place. As well it can sometimes mean quite a large down payment is required. It is important to note that an existing mortgage at lower than current rates can be assumed and blended into a larger new mortgage to lower your overall average interest rate, and accommodate a lower down payment if your credit is in good order.

Most importantly – Ensure it is the best deal for you!

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