Mortgage dilemma: seems like there is no optimal solution?
June 26, 2014 12:14 PM   Subscribe

This was me a few months ago: Rent or sell my condo at a loss? Well, now I've decided to sell it. But have a question about what to do about my mortgage.

I own a tiny condo that’s worth about $255,000. I have about $27,000 in equity. The market where I live is very strong and my unit would likely sell for close to/slightly above $255,000, based on comps. My partner and I have now decided that we want to sell our individual condos and buy a new house or condo together as soon as possible. So we each have to sell a condo.

The complications – I will try to explain as best as I can: I have a closed mortgage that does not mature for 2 more years. My partner has no mortgage on their condo. I’d like to carry over my mortgage amount to a new place we buy together in order avoid the financial penalty – more on that below.

We think it makes more sense to sell my place first (which is much smaller) and not buy a new place together for a few months. We’d need a bit of time to look. We'd live in partner's place while we look.

But if sell my condo without transferring the mortgage right away to a new place, I must pay a penalty for breaking my mortgage before the term expires. That would be ~ $11K.

So what do we do? A friend said we should ask my bank this: If we buy a new place and take out a our new mortgage with your bank within 3 months of breaking the current mortgage contract – would all or some portion of the penalty money be returned?

She said banks will sometimes do this to keep the customer. I am a very small potatoes customer so not sure if they’d even care!

The amount of the new mortgage would likely be the total mortgage amount on the new place – the rest would be covered in the down payment (which we won’t have until we sell partner’s condo.) Both our names would be on the new mortgage/condo or house. (i.e., we plan to be joint tenants not tenants-in-common since we are partners -- we are not married, but don’t rule that out.)

If the bank says no – then what are some other options? Maybe there are no creative solutions and I just have to sell my condo and eat the penalty?

Sorry if I have not explained this well – this is confusing the heck out of both of us.

BTW -- this is in Canada -- not sure if that matters.
posted by myorangesocks to Work & Money (1 answer total)
You need a lawyer.
posted by sevensnowflakes at 2:30 PM on June 26, 2014 [2 favorites]

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