How to buy a mortgaged property from others
People have their reasons to sell their property; new or old. One of the reasons could be that the high interest rates on mortgages that has occurred in recent times pushes them to financial insecurities and causing high financial liabilities. Another reason could be that the person selling wants to buy a bigger property and won’t be able to without first selling the present one. One other reason is relocating to another city which might be taken as an option because the location is closer to the person’s place of work and offers a better infrastructure. If you are a home buyer, read my other post –
Most Important Steps For First Time Home Buyers
So, to find a mortgage to buy in the mortgage market (a place to buy and sell mortgages) owned by another person is possible and safe to do. But it is important to know that if you are to carry out an activity which involves buying a mortgaged property, it is necessary to be aware of what might go wrong with your bargain buy and know what information are to be acquired before finalizing any sale like the risks involved in buying a mortgaged property.
Things to know and carried out before buying a mortgaged property:
1. Do your research and preparation: most mortgaged properties are sold by an ‘auction’ or ‘tender’ platform. So, if you intend to buy a mortgaged property, it is very necessary that you make plans to get geared up and prepared and also to make all necessary research about the property.
Things you need to get while making plans and doing research includes:
• Arrangement for finance: this is the first thing to be done to be able to successfully acquire a mortgaged property. This is because you will be required to make a down payment or a deposit (most preferably, nothing less than 10% of the sale price).
• Get a certificate of tittle search for the property: this shows interest rate relating to the property which includes charging orders, any legal claim or other obligations that could restrict or complete the buying of the property or caveats registered on the tittle of the property.
• It is necessary to get a builder’s report regarding the property, the Geo technical reports that show the physical properties of the soil and rock around the mortgage property, the valuation and all other necessary information.
2. No warranties: it is important to know that with a standard mortgage sale, warranties in a normal sale and purchase agreement are deleted. And because the mortgage lenders alongside the mortgage bank, is not the owner occupier of the property about to be sold. Therefore, they are not able to guarantee or promise that the property will be in good conditions.
3. Risk of damage after agreement signed: in cases whereby the present mortgage borrower are not able to make payments due to high interest rates that cause high financial liabilities, the mortgage lenders may tend to cut short the mortgage to avoid any form of loss and sell the mortgaged property to any other person interested in buying the property, the period between when you sign the agreement is the ‘danger period’. The risk of damage to the property is passed to you on the agreement. In many cases, the present owners of the property may get upset with the sale of the property by the bank or mortgage lender and cause intentional damages to the property and the since the bank cannot warrant that the property will be in a good state, any damage caused is at your own risk.
4. Talk to your lawyer: buying a mortgaged property can be a time-consuming and risky process. So it is necessary to direct all mortgage questions to your lawyer to be able to give you basic information about the terms and conditions involved in acquiring a specific or particular property.
One can easily sell or buy a property which is mortgaged. The only thing required to complete the process is to acquire the bank’s consent letter along with the statements attached to the current loan account which indicates the remaining balance of loan against the property. Any other important documents that will be needed maybe for future references should be collected also.