When You Buy a New House, What Happens to the Mortgage?

If you’re preparing to move or upgrade your home, you might be asking: “When you buy a new house, what happens to the mortgage?” It’s a common question — and one that can impact your finances significantly.

In this post, we’ll walk you through what typically happens to your existing mortgage when buying a new home. Whether you plan to sell your current home, keep it as a rental, or take out a new loan, here’s everything you need to know.


1. If You Sell Your Current Home

This is the most common scenario:

  • You list your home for sale and, once sold, use the proceeds to:
    • Pay off your existing mortgage
    • Cover closing costs and real estate fees
    • Put toward the down payment on your new home

Once your current mortgage is paid in full, it’s officially closed, and you’re no longer responsible for it.


2. If You Keep Your Current Home

Sometimes, instead of selling, you may want to keep your current home and rent it out . In that case:

  • You’ll likely need to refinance into a buy-to-let mortgage or get approval from your lender.
  • You’ll continue paying your current mortgage while taking out a new mortgage for your new home.

This means you’ll have two mortgages at the same time , which lenders will consider when approving your new loan.


3. Getting a New Mortgage for the New House

Whether or not you’ve sold your old home, buying a new house usually involves getting a new mortgage . Here’s how it works:

1.Pre-ApprovalGet pre-approved for a new mortgage based on your income, credit, and existing debts.
2.Apply for the LoanSubmit financial documents, including proof of income and any existing mortgage payments.
3.Appraisal & UnderwritingThe lender evaluates the new home and reviews your financial history.
4.ClosingSign the mortgage agreement and pay closing costs.

If you still own your previous home, lenders will factor in that mortgage payment when calculating your debt-to-income ratio.


Can You Have Two Mortgages at Once?

Yes, you can have two mortgages at the same time , but:

  • Lenders will assess whether you can afford both.
  • You may need a larger down payment on the new home.
  • Interest rates may be slightly higher due to increased risk.

Some buyers choose a bridge loan — a short-term loan that helps cover the gap between buying a new home and selling the old one.


Final Thoughts

Buying a new house doesn’t automatically cancel your existing mortgage. What happens next depends on whether you sell your current home , keep it as a rental , or take out a second mortgage .

With proper planning and communication with your lender, you can smoothly transition from one home to another without unnecessary financial stress.


Frequently Asked Questions (FAQs)

Q1: Do I have to pay off my mortgage if I buy a new house?
Yes, if you’re selling your current home, your existing mortgage must be paid off using the proceeds from the sale.

Q2: Can I keep my old mortgage and get a new one?
Yes, but you’ll need to qualify for both loans. Lenders will review your debt-to-income ratio carefully.

Q3: What happens if I don’t sell my house before buying a new one?
You may need a bridge loan or be approved for two mortgages at once, which could affect your borrowing power.

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