Assuming a Mortgage
If the buyer of a property in Ontario takes over the conditions of the seller’s mortgage (the amount owing for the remaining term at the existing rate), this is called assumption of the mortgage. As a BUYER, you need to look at this carefully. In some cases, it will work in your favor, especially if the high ratio insurance premium has already been paid. The first thing you have to do is to find out the details of the mortgage you could be taking over – what is the amount of the mortgage remaining? What is the interest rate and when is the renewal date (the date the rate ends)? How much time is remaining in the amortization? You need to make sure that the mortgage amount is enough for your needs and that the rate you are assuming is comparable to (or better than) current rates for the same length of time. You also need to consider the conditions of the mortgage contract – you may find it contains conditions you don’t like. If interest rates have been going up, then assumi...