Are TD Fixed Mortgages Assumable?
Taking over someone’s mortgage can seem like a great way to get into the housing market. But it’s not always that simple, especially when it comes to assumable mortgages from major lenders like TD. Let’s take a closer look at how TD’s policies work for fixed-rate mortgages, and what your options are if you want to assume an existing home loan.
What Does “Assumable” Mean?
An assumable mortgage is one that allows a new buyer to take over the seller’s existing home loan. This transfers the mortgage, interest rate, and terms to the new homeowner. It saves the buyer time and money by avoiding an entirely new mortgage approval process.
Back in the 1970s and 1980s, almost all mortgages were assumable. But rising interest rates changed that, and by the 90s most new fixed mortgages stopped being assumable. However, any older fixed mortgages that originated when rules were looser could still be assumed by a new buyer.
Are Current TD Fixed Rate Mortgages Assumable?
In short – not directly. TD does not allow any of its current fixed-rate mortgages to be assumed. Their legal language is very clear that you cannot assume one of their existing fixed loans.
Instead, the new owner must qualify and apply for their own mortgage. This means going through TD’s full approval process just like any other buyer.
Assuming an Older TD Fixed Mortgage
As mentioned earlier, older fixed-rate mortgages may still be assumable under the right conditions. For example, if you’re taking over a property that has a TD fixed rate mortgage from 1990, it may be possible to assume it.
The key is making sure the original mortgage documents allowed for assumptions. There would need to be legal language confirming it can be assumed by a qualified new buyer.
Your real estate lawyer can review the original mortgage paperwork to see if the assumption is possible. But even then, there are no guarantees TD will approve it these days unless required by the original terms.
The Mortgage Assumption Process
If you find an assumable older TD fixed mortgage, here are the typical steps to assume it:
- Review paperwork – Confirm the mortgage can legally be assumed based on the original documentation.
- Apply to assume – Submit an application to TD, including your financial details to prove you qualify.
- Obtain approval – TD will evaluate you as a borrower and decide whether to approve the assumption.
- Legal transfer – If approved, your lawyer will handle the legal transfer of the mortgage into your name.
- Closing costs – You’ll be responsible for closing costs like legal fees and title transfers.
TD will assess your financial situation including income, debts, credit score, and down payment. If they don’t think you can manage the monthly payments, they may deny the assumption.
Pros and Cons of Assuming a Mortgage
Assuming an older fixed-rate mortgage has some potential advantages:
Pros
- Lock in a lower rate than when mortgages were cheaper
- Skip mortgage approval and get a faster closing
- Potentially avoid CMHC insurance by putting down <20%
Cons
- A limited supply of assumable mortgages
- You’re still on the hook for payments if the original borrower defaults
- Missed opportunity to negotiate current low rates
- Less flexibility to customize mortgage features
Overall there are decent benefits but also risks to be aware of. It makes the most sense for assumes when interest rates are escalating rapidly.
Alternatives to Assumption
Since most TD mortgages are not assumable, here are some alternatives if you want to take over the seller’s home:
- Get a new mortgage – Apply and get approved for your own financing based on current rates and your qualifications.
- Take over remaining payments – Arrange with the seller to make their remaining loan payments to the lender until it???s paid off.
- Rent-to-own – Rent the home from the seller while slowly building equity, then buy it outright when the mortgage matures.
These give you other options that can still potentially save money compared to a totally new purchase.
The Bottom Line
While it’s unlikely you’ll be able to assume a current TD fixed-rate mortgage, exceptions can be made for older loans depending on the terms. Reviewing the paperwork carefully is key – if the legal assumption isn’t possible, your alternatives are applying for a new mortgage or private financing with the seller.
Embrace accurate financial planning by using our latest TD Mortgage Calculator to Estimate Monthly Payments for Your Dream Home
Post Comment