So You Want to Sell Your House, But Still Owe the Bank? Here's How!

Hey there, fellow home sellers! Thinking of selling your house but worried because you haven't fully paid off the loan yet?

Relax, you're not alone! This situation is more common than you might think, and the good news is, selling your house with an outstanding mortgage is absolutely possible.

In fact, it can be a smooth and successful journey if you're armed with the right information.

Buckle up, because we're about to demystify the process and answer all your burning questions!

Step 1: Know Your Loan Like the Back of Your Hand

Before diving in, it's crucial to check your loan information.

This includes understanding the lock-in period.

Why? Because selling during this period can incur a penalty of 2% to 5% of the outstanding loan amount – ouch!

So, avoid this unnecessary financial blow by checking with your bank if your loan has a lock-in period and when it ends.

Step 2: Celebrate the Sale and Purchase Agreement (SPA)

Hooray!

You've found a buyer, and you've received the reservation and advance payments.

Now, it's time for the SPA.

After both parties sign this agreement, your lawyer will contact your bank to get a statement of the remaining loan balance.

This statement is crucial for the buyer to make the first payment.

Step 3: Let's Get Things Rolling – Payment and Redemption

Here's where the magic happens!

The buyer's bank pays your bank to settle your loan balance.

Imagine you're selling a house for RM200,000, and your outstanding loan with Bank A is RM130,000.

In this scenario, the buyer's bank (Bank B) will pay Bank A the RM130,000.

Once this payment is made, Bank A will hand over the grant and other relevant documents to Bank B.

With the loan settled, your bank will provide your lawyer with the original grant and the original SPA.

This allows the lawyer to create a new SPA, marking the mortgage redemption process.

Step 4: Property Transfer – It's All Official!

Now, things get official with the property transfer handled by your lawyer.

This involves various steps, including:

• Reviewing mortgage records

• Document submission and verification

• Signing documents for the lien release

• Obtaining the original grant from your bank

• Dealing with transfer stamp duty and pledge

• Registering the transfer of ownership and mortgage at the land office

• Disbursing the remaining loan balance to you (seller) by the buyer's bank

Step 5: Time to Hand Over the Keys!

Congratulations, you've reached the final step – vacant possession!

Your lawyer will request the full loan balance from the buyer's bank and hand it over to you.

Now, it's time to hand over the keys to the new owner.

Remember, ensure the house is in good condition to avoid any post-handover issues.

Step 6: Don't Forget the Selling Costs!

While you may be excited about the sale proceeds, remember there are selling costs to consider:

• Real Estate Profit Tax (CKHT): This tax applies to any profit you make from the sale. However, there's an exemption available for Malaysians selling their private residence, so be sure to check your eligibility.

• Agent or Real Estate Agency Fees: If you used an agent or agency, you'll need to pay their fees, typically around 3.18% of the sales price.

• Legal Fees: The lawyer handling the process also needs to be compensated. The fee varies depending on the property price.

Bonus Tip: Prepare for Smooth Sailing

Before embarking on this journey, here are some pro tips to ensure a smooth selling experience:

• Do your research: Understand your property's market value by comparing it to similar listings in the area. Consider hiring a certified appraiser for a professional assessment.

• Seek professional help: Deciding between a lawyer and a real estate agent depends on your comfort level with legal matters. Choose the option that best suits your needs.

• Get organized: Prepare all the necessary documents beforehand, including bank statements, ID, agreements, title deeds, tax bills, and utility bills. This saves time and avoids delays.

Selling a house with an outstanding mortgage might seem daunting, but with the right knowledge and preparation, it can be a successful and rewarding experience.

Good luck!

P.S. Remember, this article provides a general overview. It's always advisable to consult a professional like a lawyer or financial advisor for personalized guidance specific to your situation.

Selling Your House with a Mortgage: A Hassle-Free Guide

Thinking of selling your house but worried about the outstanding loan? Don't sweat it! This guide unlocks the secrets to a smooth and successful sale, even with a mortgage. Learn about the process, from checking loan details to navigating the transfer and avoiding hidden costs. Bonus tips included! Sell smart, sell with confidence.