Financing a real estate transaction is well calculated and the borrower is able to repay the house loan in accordance with the contract by the end of the term. Occasionally, however, there are situations that you didn’t expect and that force you to give up the house loan.
Such situations could be:
- Separation of partners (whereby the non-paying part wants to take over the home loan signed by the paying partner in order to hold the property)
- Parent falls ill or dies (one of the children wants to keep the other parent’s home and therefore take over the house loan)
The aim of any assumption of debt is to prevent the sale of a property and to remain the owner, either for your own benefit or for the benefit of a close person.
Have increased their home, for which they are still paying off a loan at the time of the separation.
This becomes a real problem when only one of the partners has signed the loan agreement and is no longer able to service the loan due to the divorce. In such a situation, selling the property would be a solution. However, if the partner who is not in the loan agreement wants to keep the property, he can take over the house loan and have himself replaced as the new debtor in the place of the original borrower.
If this were done, the previous borrower would be released from his payment obligation, the bank would continue to receive its installments and the new debtor could continue to live in the property.
- In order to be able to take out a home loan, the bank must give their consent and you should be financially able to pay the installments. The bank will surely check the creditworthiness of the new debtor.
Parents have built or bought a home using a home loan and are suddenly unable to pay due to illness or the death of a spouse. Normally, sooner or later there would be a foreclosure.
In order to preserve the property and thus their home for the parents, the child can take over the parents’ house loan and pay the installments.
In this case too, the bank’s approval must be obtained and a free contract in the form of a contract must be drawn up. This can be concluded between the bank and the new debtor and justifies the withdrawal of the previous debtor from the loan agreement and the resulting obligations and rights.