When we consider buying a new house because we are moving to another city, because we are going to expand the family or because our personal situation has changed (for example, in the case of divorce), it is important to assess all the options we have to do so, especially if We still haven’t finished paying the mortgage on our current home.
The normal thing in these cases is to put the property up for sale and wait for someone to take an interest in it. However, this option is not always the most effective or the fastest: the operation can be delayed until we find a buyer who makes us an interesting offer, something that depends on many factors, including the situation of the real estate market at that time.
Our advice to speed up the sale is to hire the services of a real estate professional or an expert to advise you throughout the process, and to put in place all the resources and procedures so that you find a buyer as soon as possible.
Still, some homeowners value alternatives such as selling their home to the bank to buy another. But it is possible? Will the bank be interested in my home? It is profitable? What other options do I have for selling a mortgaged home?
Can I sell my house to the bank to buy another one?
If you want to sell your house to buy another, you will have considered the possibility of offering it to the bank with which you have your mortgage.
This option, although possible, is rare. Also, it is not always worth it. As you already know, the nature of banks is not precisely to buy houses, but to lend money to others so that they can acquire them, so these types of operations are signed on exceptional or very beneficial occasions for them.
It is also true that, due to the last economic crisis, some banks have taken over a significant number of homes, and that they have even created strictly real estate subsidiaries such as Sky Marketing (from Banco Sabadell) or Altamira (from Banco Santander). These properties come mostly from mortgage defaults, liens and works were left half and that the bank has remained as payment for the debt contracted by developers and construction companies.
In any case, banks only buy properties from people who have signed a mortgage with them, and only in exceptional cases do they consider the acquisition of a specific property (for example, a historic building, a hotel, a tourist complex, etc.).
Am I really interested in selling my house to the bank?
If you have already made the decision and want to know how to sell your house to the bank, first you should know two things:
- Banks are not interested in housing, so a priori they do not buy habitual residences with outstanding mortgages. If you want to sell your house to the bank to buy another, the most normal thing is for your entity to propose other alternatives and give you facilities such as renegotiating the terms of your mortgage, extending it, etc.
- When you sell a house to the bank, you are not doing a normal sale as you would with an individual. Actually, what you do when you sell your house to the bank is put it up for public auction. The problem with public auctions is that currently the supply is high and prices are down. If the bank obtains an amount that is less than your outstanding debt with them, you will have to continue paying until you pay off your mortgage.
How to sell your house to the bank with a reverse mortgage
Another formula to sell your house to the bank, although also unusual, is through a reverse mortgage. This type of mortgages is intended for people over 65 who, once retired, decide to obtain an extra income with this financial product.
Basically, a reverse mortgage consists of the bank giving the owner monthly money for his house, as a mortgage payment, but in reverse (hence its name).
The owner will be able to continue using the house as long as he lives. When you pass away, and depending on the type of contract with the bank, your heirs can choose between returning the money to the bank and recovering the property, or collecting the remainder of the loan (if there is anything left), and having the home go directly to the bank.
As in the previous cases, not all homes are suitable for this type of mortgage. The bank will prioritize high-value properties and free of charges to get the most benefit.
What other options do I have to sell a house with a mortgage?
If you need to buy a new house or apartment, the options to sell a home with a mortgage quickly are:
Pay off the mortgage with the sale of the property
In this case, you will have to find a buyer who will pay more than what you have left to pay on the mortgage.
If you make this decision, the idea is that you get money to cover the pending mortgage and pay off your debt with the bank. If you can get back what you have invested and even make a profit, much better. This is possible because the real estate market is variable and, when you appraise your home before selling it, it may be valued at a higher amount than that for which it was purchased.
Subrogate the mortgage and sell at a more affordable price
In this case, you will not have to pay off the mortgage: you would simply receive a cash amount from the buyer and he will assume the pending mortgage payments. This alternative is usually the fastest, although you will have to lower the price of your property.
Apply for a “bridging mortgage”
This option can be valid if you want to sell your house to buy another one of lower value. If the bank accepts your proposal, you will be able to acquire a new apartment or a new house, even before selling the current one, through a bridge mortgage.
However, this option has risks. The most important is that both mortgages are unified in a single loan, so at the beginning you must assume the cost of both. Once your current home is sold, the first mortgage will be canceled (with liquidation or subrogation) and you will have to assume only the second.
Do you need to sell? We have the solution
Selling an apartment or a house to buy another is an important step and it is essential not to make mistakes.
First of all, you must analyze all the alternatives to know which one suits you. You must make the decision relatively “quickly”, since from the moment you decide to sell your house until you put it up for sale, you may be wasting time and money, especially if you need to buy a new home.
A common mistake when selling a home is not pricing it properly. Your goal should be to achieve the maximum and it is usual to put a higher starting price, although you must be realistic and always be open to negotiation.
It is also important to make a good description of the home, to know which photographs to use in real estate portals or to enhance the strengths when you show your home to future buyers.
Our advice to sell a house with all guarantees and in the shortest possible time is to trust real estate professionals.
From Tajarat properties we suggest that you forget how to sell your house to the bank and that you bet on a safe option, without commissions (you will only pay a fixed fee once the sale is formalized) and with advice at all times for negotiation, documentation, etc. Shall we talk?