There are different types of mortgage takeover, each with their own benefits and fees. Here we'll discuss the options and how to handle them.
Put simply, mortgage takeover is the process of transferring a mortgage. When it comes to buying and selling houses, mortgage takeover means buying a house that's currently put under mortgage by the previous owner. You don't then need to make a mortgage agreement with the bank for a new property, but simply continue the existing mortgage. There are several reasons why many people choose to take over a mortgage instead of starting one.
The most common reason why people prefer to take over a mortgage is the possibility to get a lower interest rate. Generally people take over a mortgage when they want to buy a bigger house, but are not in a rush and want it to suit their needs. It could also be because of tight finances or other reasons.
Just like a regular mortgage, the process to take over a mortgage also involves official documentation in the form of an agreement letter. This is done to ensure that none of the parties are at a disadvantage. This procedure is very important considering a house is a long-term investment and it's not cheap.
The takeover processes can be classified into several types, depending on the parties involved, the agreement process and its security. Below are the types of mortgage takeover you need to know.
1. Interbank takeover
This involves the transfer of a mortgage from one bank to another. This type of mortgage takeover can be done by individuals when they have no intention to buy or sell a house, but simply to transfer the mortgage between banks.
Generally, people transfer a mortgage between banks because they want to get a lower interest rate than the initial bank. That way, they can pay off the total mortgage with lower costs than the initial estimate.
The procedures and requirements needed are not difficult. If you have a good credit history, good repayment availability, and meet the requirements that are not much different from your initial mortgage, everything should run smoothly.
2. Mortgage transfer
If you're the buyer or seller, it's possible to transfer a mortgage that's not been fully paid off yet. Mortgage transfer will move the mortgage responsibilities from one individual to another. As well as the two parties involved in the buying and selling, there's a third party included - the fund provider or bank. The process is a bit more complicated as it involves three parties, but it's not difficult if you have prepared everything.
The process to buy a house with this kind of takeover is not much different from the regular mortgage process. You need to prepare all the requirements asked by the bank just like in the regular mortgage application. Things like identity proof and income statements must be prepared according to the standards required by the bank. Also, make sure to come to the bank with the party who will transfer the mortgage to you (the person selling the house).
After the bank completes and approves the mortgage application, it will issue a 'Deed of Sale and Purchase' (AJB) and 'Power of Attorney Imposes Mortgage Rights' (SKMHT). You can then continue paying the mortgage.
3. Private mortgage takeover
Private mortgage takeover is usually carried out solely between the seller and buyer, without involving the bank as the mortgage fund provider. As it does not involve the bank, the validity and security of the transaction is very risky.
Private mortgage takeover is usually chosen if the buyer doesn't want to involve the bank for various reasons. For example, if they don't want to pay the fee to make the mortgage agreement, or for other reasons. Usually the mortgage transfer agreement is only made in front of a notary, including a statement that the certificate will be handed over to the buyer at the end of the mortgage term.
In normal mortgage procedures, the bank will only hand over the certificate of ownership to the name stated in the mortgage agreement. It will not, for example, give the certificate to the person who makes all the mortgage repayments, if their name is not on the bank's mortgage agreement.
So, if you do a private mortgage takeover, the certificate will not be handed over to you, but to the name stated on the mortgage agreement. Even though you have made a notarial agreement, sometimes it's still difficult to handle matters if there are issues with the certificate handover to the buyer.
Whatever you choose, a mortgage takeover involves certain fees. To decide which mortgage takeover to choose, here are some cost considerations:
1. Interbank takeover
To transfer a mortgage from the initial bank to a new bank, you need to:
With this process, there are new mortgage fees and a penalty fee on the initial mortgage.
A penalty fee is for paying off the mortgage earlier than scheduled. You can find this amount in the mortgage agreement with the initial bank. If you don't know, you can ask the bank directly. Generally, the penalty fee charged by the bank is between 1% to 3% of the remaining outstanding debt. However, the exact amount depends on the bank.
As well as the penalty fee, you'll also have to pay new mortgage fees to the new bank. These fees usually include appraisal fees, notary fees, Deed of Encumbrance (APHT), Power of Attorney Imposes Mortgage Rights (SKMHT), bank provision fees, insurance and processing fees. Generally, the amount is around 7% of the ceiling amount. But again, it depends on the bank you choose.
To help things run smoothly, first know the mortgage penalty from the initial bank. Then think about the loan ceiling amount you need from the new bank.
2. Mortgage transfer
In principle, the fees you need to pay for mortgage transfer are not much different from an interbank takeover, as long as you carry out the takeover officially and in accordance with the regulations. You'll pay the penalty to the initial bank and new mortgage fees to the new bank. The amount can be flexible depending on the agreement between the seller and the buyer. You will also pay the fee for the notary who legalises the mortgage takeover agreement.
3. Private mortgage takeover
In private mortgage takeover you don't have to pay the penalty fee nor mortgage fees to the new bank. This is because the mortgage transfer is only carried out based on the agreement and in front of a notary. This means you only need to pay for the notary fee. Although it looks cheap and most cost-effective, a private mortgage takeover has its own risks, as mentioned previously.
By understanding the types of mortgage takeover mentioned above, you can now choose the safest and most beneficial way for you. To get the maximum benefits, apply for mortgage takeover or the refinancing of your mortgage with an HSBC Home Loan.
An HSBC Home Loan provides many different programmes suitable for different types of financing, such as property purchases, loan transfers, mortgage takeover, and even a top-up facility for ongoing mortgages. HSBC also offers competitive fixed interest rates with a fast and simple process.
In fact, by applying for an HSBC Home Loan starting from IDR500 million, you'll automatically become a customer of HSBC Advance and can enjoy various benefits such as:
So, what are you waiting for? Apply for mortgage takeover with an HSBC Home Loan now!
