Taking over my parents' home loan

Any general questions you might have in regards to loans and finance.
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Otto Dargan
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Re: Taking over my parents' home loan

Post by Otto Dargan »

Hi connor,

Generally, you can't just take over your parents' mortgage because a bank can't simply approve a home loan with no property or security attached to it.

Since the property title is in your parents' names, the property will need to be used to pay out the existing mortgage. However, there's an exception to this rule if the loan is an “assumable” mortgage by the bank’s definition, which would mean that the mortgage would have to be free of a due-on-sale clause and a fee charged for assuming the home loan.

The problem is that due-on-sale clauses are on all modern-day home loans so assuming a mortgage is no longer possible. Your parents could sell you the property at or below market value, otherwise known as a favourable purchase arrangement.

Your parents could even sell it to you at a price equal to the mortgage balance, baring in mind there will be stamp duty and other costs for transferring ownership, just like a normal sale.

If you would like to know more about this, including standard bank lending policy, you can check out our website or speak with our specialist mortgage brokers by calling 1300 889 743 or filling in our free online assessment form.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

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