Selling a home is a major decision—especially when there’s still a mortgage on the property. In Canada, it’s completely legal and very common to sell a house that still has an outstanding mortgage. However, there are some important steps and considerations you should be aware of before listing your home for sale.
1. Understand Your Mortgage Terms
The first step is to review your mortgage contract. You need to know if you’ll face any penalties for paying off your mortgage early, which is especially common with fixed-rate mortgages. Lenders may charge a prepayment penalty or interest rate differential (IRD) fee.
2. Determine Your Mortgage Payout Amount
Contact your lender to get a payout statement. This document outlines how much you need to pay to discharge your mortgage, including any penalties or fees. This amount must be paid on or before the closing date of the sale.
3. Selling Price vs. Mortgage Balance
Ideally, your home sells for more than what you owe. The proceeds from the sale are used to pay off the mortgage first, and any remaining funds go to you. If the sale price doesn’t cover your mortgage, you’ll need to pay the difference out of pocket—this is called being “underwater.”
4. Porting Your Mortgage
If you’re planning to buy a new home, you might consider porting your mortgage. This means transferring your existing mortgage (along with its terms and interest rate) to a new property. Not all mortgages are portable, so consult your lender for details.
5. The Role of a Real Estate Photographer
Presentation matters when selling a home. A real estate photographer can make a huge difference in how your property appears online. Professional photos can attract more potential buyers and help your listing stand out in a competitive market. High-quality images can even impact the perceived value of your home, potentially leading to a faster sale and a higher offer.
6. Legal and Realtor Assistance
Your real estate agent and lawyer will guide you through the paperwork, negotiations, and legal steps involved in selling a mortgaged property. They will ensure the mortgage is paid off correctly and that the title is transferred smoothly to the buyer.
Ready to Sell Your Home?
Whether you’re staging your property or capturing its best angles with a skilled real estate photographer, preparation is key to a successful home sale. And if you’re moving on to the next chapter of your life, don’t forget—if you’re planning a wedding along the way, book your wedding photographer early to capture every unforgettable moment.