I took out a loan to buy a property in the U.S., but because of a change in plans, I want to sell the property before I have paid half of the loan. Is this possible?

In the U.S. secondary real estate transactions, such properties with outstanding loans are in mortgage status and need to be deregistered by the bank in order for the buyer and seller to continue the transaction and smooth the closing process.

Reselling a mortgaged property is very common in the United States. You should know all the feasible ways to do this in advance of the U.S. real estate transaction so that you are well prepared before the transaction.

When is the best time to resell a property?

In fact, there is no precise and uniform standard for when to sell a U.S. property; it depends on the seller's specific circumstances. Before selling, it is best for the seller to know the current state of the U.S. real estate market in advance and to consult with a real estate agent.

It is usually recommended that holding a U.S. property for five years or more before selling would be a good cycle, which basically ensures and breaks even with all the initial investment costs.

Of course, it is not necessarily a losing deal if the property is sold early.

According to Section 121 of the regulations established by the IRS, as long as the home is used as a primary residence for at least two years and the first $250,000 of the sale of the home, the profit made is not subject to capital gains tax.

The exemption is up to $500,000 if the couple files a joint tax return.

If you only live in the home for a full year, the IRS will also reduce the tax proportionally, which is $250,000 for a couple.

In short, it is more cost effective to resell the property after you have lived in it for at least two years.

If you have to resell the mortgaged property, there are usually three forms:

1. Using the buyer's down payment to pay off the remainder of the loan.

This is the most common way of reselling a second home.

On the one hand, this method also depends on the intensity of the housing market.

On the other hand, this method requires determining the amount of money remaining owed and the market price of the house to ensure that the current money from the sale of the house will offset the remainder of your mortgage.

If there is not much left on the loan, the seller can use the buyer's down payment, usually 30-40% of the total closing amount of the down payment property, to pay off the remaining loan and then cancel the mortgage registration on the property and proceed to the next transaction.

If the buyer's down payment is less than the outstanding loan amount, the seller may also negotiate with the buyer to increase the down payment or reduce the price appropriately.

It is important to note that some banks will have restrictions on early loan repayment. If the seller does not meet the conditions for early repayment, the contract may not be successfully terminated or some banks may require the lender to pay an early repayment default fee.

However, early loan repayment is not common nowadays. It is usually only available at certain times.

For example, if a home is sold within five years of purchase, early repayment defaults can be calculated in several different ways and are determined by the lender.

It may be a percentage of the remaining loan balance, a percentage of the interest owed, etc.

2. Remortgage, transferring the loan to the buyer.

A remortgage is when the borrower sells the home as collateral and the buyer of the home continues to repay the seller's outstanding loan with the consent of the lending bank, which is more favorable to the seller.

However, the procedure for this method is more complicated and depends on the buyer's wishes and whether the banking institution allows it. There are cases of interbank remortgage or interbank remortgage.

3. Refinance to pay off the remaining loan.

This method is rarely used.

If the seller wants to pay off the loan before selling the property, or if the buyer is optimistic but not willing to buy the property with outstanding loans, or if the seller's existing interest rate is not as good as the rate the buyer can get, then the seller can take the form of a refinancing to pay off the remaining loan of the property he wants to sell by lending a certain amount of money to the bank through a mortgage, but this method is legally more complicated, time-consuming and less used.

The above, for reference only, can be done in consultation with the broker.