Assumable Mortgage
Quick Definition
A mortgage that can be transferred from seller to buyer, keeping the original rate and terms.
Full Explanation
An assumable mortgage allows a homebuyer to take over the seller's existing mortgage — including the interest rate, remaining term, and outstanding balance — rather than obtaining a new mortgage. This is particularly valuable when the seller has a lower interest rate than currently available. In Canada, most variable-rate mortgages are assumable with lender approval. Fixed-rate mortgages are often not assumable or require lender consent. The buyer must qualify for the mortgage under the lender's current underwriting standards. Assumable mortgages can be a significant selling point in high-interest-rate environments.
Related Terms
Mortgage
A secured loan used to purchase real estate, with the property as collateral.
Fixed Interest Rate
An interest rate that stays the same for the entire loan term.
Variable Interest Rate
An interest rate that fluctuates based on the prime rate.
Mortgage Renewal
Renegotiating mortgage terms at the end of a term without refinancing the full mortgage.
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