Existing financing may be assumed by the buyer provided that the mortgagee agrees and, in most cases the buyer qualifies by being eligible to obtain a loan of this nature from the lender, just as original mortgagor did. When buyer assume the mortgage, he / she takes over the mortgage balance and becomes responsible the payments, terms and all monies owed.

By assuming existing mortgage the buyer may save appraisal fees, some legal costs and survey costs. The seller is benefited by savings in any *payout penalty or *interest differential that applies.

* Payout penalty

Lenders Charge if the debt is paid prior to the maturity of the term on closed mortgage.
Most commonly these are as follows;

3 months interest penalty or interest rate differential. Interest rate differential is the difference between interst rate on your mortgage contract compared to the rate at which lender can re-lend the money.