According to Wow.ca’s weekly average historical posted rates, the 5-year fixed mortgage rate hovered close to 7.04% before the rate cuts in June 2024. Since the rate cuts, the mortgage rates have dipped and are currently sitting at 6.09%, following two rate hold announcements. But what if you could take on another person’s low-interest mortgage instead of applying for a new mortgage at the current 6.09% rate? That’s possible if the seller of the house for sale in Brampton has an assumable mortgage.

How Can  Assumable Mortgage Help You Buy a House in Brampton

An assumable mortgage is basically a home loan that you, as a buyer, take over from the current homeowner. So, when you buy a house in Brampton with an assumable mortgage, you don’t apply for a new mortgage. Instead, you step into the seller’s shoes and take on their existing loan.

So, what exactly do you take over in an assumable mortgage? Three key things:

• The interest rate the seller is currently paying on their mortgage.
• The monthly mortgage payments – you continue paying the same amount the seller was paying.
• The remaining balance and term of the loan.

An assumable mortgage can be a smart move if the current mortgage rates are higher than what the seller has locked in.

If you want to assume a mortgage, you must first find houses for sale in Brampton with assumable mortgages. You must hunt down properties that have what you need and whose sellers have assumable mortgages. Once you find the perfect home with an assumable mortgage, you need to apply to the lender that holds the seller’s mortgage. If the lender approves your application, you can officially take over the mortgage.

What to Love and What to Watch Out For With Assumable Mortgages

➔  The Upside of Assumable Mortgages

1. Take Over the Seller’s Lower Interest Rate and Save Big

The most significant benefit of assumable mortgages is this: you get to lock in a lower interest rate than what’s currently available in the market. If the seller locked in their mortgage when rates were much lower, you could take advantage of that by assuming their mortgage.

Let’s say the seller bought the house for sale in Brampton or renewed their mortgage back in January 2022. The average 5-year fixed mortgage rate in Canada was around 4.79% at that time. Fast forward to May 2025, the average rate has climbed to 6.09%. That’s a 1.30% difference, and this minor rate difference can make a significant impact on your monthly payments.

2. The Approval Process Can Be Faster and Smoother

Another great perk? Faster mortgage approval times.

When you apply for a brand-new mortgage, the lender has to go through the complete underwriting process. That means checking your income, assets, credit history, employment and much more – from scratch.

However, in an assumable mortgage, since the mortgage already exists, the bank or lender doesn’t have to start from scratch. While you still need to qualify based on your credit, income, and other factors, there might be less underwriting work compared to applying for a brand-new loan. In simple terms, you may be able to get approved faster and with less paperwork.

3. You’ll Likely Pay Less in Closing Costs

Assuming a mortgage may reduce some of the expensive closing costs. That’s because you are not setting up a brand-new mortgage. So, there might be –

• Lower legal costs with less paperwork to handle.
• Possibly reduced lender fees since you are not getting a new loan.
• Potentially fewer administrative costs depending on the lender’s process.

➔ The Downside of Assumable Mortgages

1. You Might Need a Much Bigger Down Payment Than You Expected

In case you didn’t know, you calculate the down payment differently for an assumable mortgage than for a traditional one. A regular mortgage requires you to base your down payment on the home’s purchase price. For example, when you buy a $800,000 house, you calculate your minimum down payment in two parts: 5% on the first $500,000 and 10% on the remaining $300,000. That means you will need $25,000 plus 30,000 – a minimum down payment of $55,000.

But in the case of an assumable mortgage, you are taking over the seller’s existing mortgage instead of getting a new one from the lender. In this case, your down payment is the difference between the sale price of the home and the seller’s remaining mortgage balance.

Let’s suppose you are buying a house in Brampton listed at $800,000, and the seller still owes $500,000 on their mortgage. If you want to assume their mortgage, you will need to pay the difference – $300,000 – upfront for the down payment. In this case, your down payment is 37.5% of the home’s price, which is far more than the minimum down payment with a traditional mortgage.

Hence, the biggest drawback of assumable mortgages is the higher down payment requirement. Unless you are buying a house where the seller’s remaining loan balance is close to the current value, get ready to shell out much more upfront.

2. You Can Only Assume Certain Types of Mortgages

Another major drawback is that not all mortgages are assumable; in fact, many aren’t. Usually, mortgages with fixed rates and shorter renewal times (1-2 years) are more likely to be assumable. However, there are several types of mortgages in Canada that are typically not assumable. These include:

• Variable rate mortgages
• Home Equity Line of Credit (HELOCs)
• Government-insured mortgages (like those backed by CMHC, Sagen, or Canada Guaranty)

So, even if you find a house you love, and the seller is open to the idea of assumable mortgages, their mortgage lender might not allow it. You must find out what type of mortgage the seller has and whether the lender allows assumption at all.

3. You Won’t Get to Pick Your Lender, and That Means Less Flexibility

When you apply for a regular mortgage, you can shop around, compare lenders, negotiate terms, and choose the one that offers the best deal for your needs. But with an assumable mortgage, you are taking on the seller’s loan exactly as it is, including their lender and the original loan terms. That means you don’t get to choose who your lender is or what your mortgage terms are. If the seller got their mortgage through a bank you don’t like working with or one that has strict customer service policies, you are stuck with it until the term ends.

Final Verdict – Is It Smarter to Assume a Mortgage Than Start a New One?

It can be – if the seller’s mortgage rate is significantly lower than current rates, they have already paid off a good chunk of their loan, and also, you can afford the upfront cost. You must do the math and speak with a mortgage professional to see what works best for you. In the correct scenario, assuming a mortgage could mean assuming a better financial future.

• Meta Title: Buying a House in Brampton? Here's How Assumable Mortgages Work
• Meta Description: Buying a house in Brampton? Find out if an assumable mortgage is right for you - learn how it works, what makes it different, and its pros and cons
• Meta Tags: realestate, mortgage

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