Selling a house, loan not yet paid off – what to do?
Yes, that is possible. You can sell your property despite ongoing loans. The prerequisite is that you comply with the conditions agreed in your real estate loan. This includes both the notice period and the potential payment of a prepayment penalty. If your loan has been running for more than ten years, there is no prepayment penalty because you are exercising your special right of termination.
What options do I have to sell my property even if the loan has not yet been paid off?
There are many reasons why you want to sell your house and get out of your loan early. However, the following applies in all cases: Talk to your bank or financial advisor about the details. Together you will find the financing solution that is right for you.
Sell house and redeem loan
The easiest way is to sell your house and use the proceeds to pay off your home loan. A prepayment penalty may apply. In doing so, you compensate the bank for the interest it would lose if you redeemed the loan early. However, the sale of the property is only worthwhile if you achieve at least the loan amount including the amount of the prepayment penalty from the sale. There is also the possibility that the new buyer will take over your loan. However, the bank must agree to what it is not obliged to do. In this case, you do not have to pay prepayment penalty. The prerequisite is that the new borrower accepts the loan agreement with all conditions and that his creditworthiness is as good as yours.
Sell a house and use credit for a new house
Another reason for selling ahead of time can be the desire for enlargement, because young people are on the move. You may have already found a suitable property and are currently selling your current home. In consultation with the bank, you can “exchange” the new property for the old one in the loan agreement. The prerequisite is that the new property has approximately the same value as the old one. However, it is advisable to calculate this variant once. If the current interest is cheaper than when you signed the contract, a new loan contract at more favorable terms is worthwhile.
An example: You have concluded your contract at an interest rate of 2 percent. You would currently benefit from interest of 1.3 percent if you signed a new contract. Then a new contract is more worthwhile than taking over the old contract.
Keep and rent house
If you want to move out of your current property, you do not have to sell it immediately. It is possible to rent them out and pay the installments with the rental income. The advantage: the old contracts can continue. There is also no need to change the entries in the land register. That saves costs.
The following always applies: If the bank incurs costs as a result of the changes to the contracts, the borrower usually has to pay for it. In addition, you should not rely on verbal agreements with the bank. Only what has been fixed in writing is permanent.