Selling while in middle of loan agreement

[Billy bob]

Let say (hypothetically)that I borrow to buy an investment property. I put down 20% and pay off another 10% over a couple of years. However, due to changing circumstances, I now need that 30% equity for something else.

How does this work? Is it possible to sell the property and liquidise my 30%? What are the implications in terms of my credit file, etc? Banks often force people to sell when they can't make their repayments. But is it also possible to voluntarily sell? I'm guessing there would be costs involved.

 

[see_change]

Of course you can sell and I'm not aware of any implications in terms of credit rating .

Out side brokerage, CGT etc One cost to consider is the break costs of a fixed loan . If you have a loan fixed at 6 % and rates are now 5 % you will be up for the difference in those two rates for the term of the loan .

One thing too consider would be putting in a 10 % deposit and then paying all of the rest into an offset account ( not available for fixed rates , but you can split the loan between fixed and variable parts ) and then you can withdraw that without all of the other associated costs . Though you obviously still have the associated loan

Cliff

 

[Aaron_C]

You can sell whenever you want or get a loan increase instead. Either way.

 

[Billy bob]

One thing too consider would be putting in a 10 % deposit and then paying all of the rest into an offset account ( not available for fixed rates , but you can split the loan between fixed and variable parts ) and then you can withdraw that without all of the other associated costs . Though you obviously still have the associated loan

Cliff

Thanks for the quick reply. The only problem with withdrawing from the offset vs selling is that it still locks in interest repayments; I was thinking more about the scenario of completely exiting the loan agreement. But your answer basically answers my question - so it can be done but it is expensive/may/may not be worthwhile.