Real Estate Terms Dictionary

Assumption of Mortgage

Definition of "Assumption of Mortgage"

The process of accepting liability of a mortgage is called assumption of mortgage. As a result, the buyer of a property becomes liable for all terms imposed by the mortgage, including payments.

What does Assumption of Mortgage mean:

When buying a new property that still has a mortgage secured against it, the new owner has the choice of assuming the existing mortgage or taking out a new one. If the owner decides to accept liability of an existing mortgage, this is called assumption of mortgage.

The assumption of mortgage is beneficial mainly when the existing mortgage rates are lower than the rates at the time of purchase. While most lenders will agree to an assumption of mortgage given that the new borrower satisfies their requirements, there are some lenders who will not allow their mortgage loan to undergo this process but will instead ask the new borrower to finance the balance.

An assumption of mortgage means that the original borrower is no longer responsible for the loan. It is wise, however, to ask for a written release of any loan responsibility in case the new owner defaults on the payment.


Here's a real-life example from one of the properties researched on PropertyShark:

Assumption of mortgage



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The glossary is intended to provide real estate professionals and home buyers with a basic understanding of various specialized terms related to legal rights over a property. All terms appear in public records such as ACRIS. We do not take responsibility for the legal accuracy of the definitions provided and ask that use of these explanations in a legal setting be made only after checking with a lawyer or another specialist in the field.