If you need to get out from under your current mortgage loan quickly, you may not have time to put your home on the market and wait for it to sell. By transferring your loan to another individual, however, that person can take over your mortgage payments -- freeing you to move or purchase another home elsewhere. The individual you transfer the mortgage loan to benefits by being able to assume your interest rate. If your home contains equity, you may even make a profit from the transfer.
Check your original loan paperwork for a due on sale clause. If your mortgage loan contract contains a due on sale clause and you attempt to transfer ownership of the property without notifying the lender, the lender can demand immediate repayment of the loan.
Contact your lender and explain that you wish to transfer your mortgage to another individual. Each mortgage lender handles transfers differently, but your lender is likely to post or email an information packet to you along with paperwork you'll need to sign.
Instruct the transferee to call your lender and ask for an assumption packet. The assumption packet contains information and instructions for the individual who wishes to assume your mortgage loan.
Fill out and return the mortgage company's paperwork. The transferee should do the same.
Negotiate with the buyer to pay a portion of your home's equity. If you have no equity in your home, this isn't an issue. If your home is worth more than you owe your lender, however, requesting that the seller pay you a portion of your equity in exchange for the transfer is reasonable and common.
Wait for the company to process the transfer request and conduct a credit check on the transferee. The individual receiving your mortgage loan must meet your lender's credit and income qualifications.
Visit a property solicitor and draw up a liability release document. This document releases you from your responsibility to repay the mortgage after the transfer. Thus, should the buyer default on his mortgage payments, the lender cannot pursue you for payment.
Pay the lender's transfer fee. The transfer fee may vary, depending on the lender. This is usually a standard fee of about £325. The fee may be paid by you, the individual assuming your mortgage or the two of you may split the cost.
Sign the deed to your home over to the new owner.
Even if your mortgage loan is transferable, your lender may refuse to allow you to transfer the loan if you are behind on your mortgage payments.
Tips and warnings
- Government-backed mortgages, such as FHA and VA mortgages, are often assumable.
- Even if your mortgage loan is transferable, your lender may refuse to allow you to transfer the loan if you are behind on your mortgage payments.