A property decoupling loan is used by homeowners who are going through a divorce and want to separate their mortgage from their property. This usually means a new loan is required as the previous loan is being serviced by 2 or more people. Often, it is not as simple as just taking one name out, as when the loan was initially offered, the lender assessed the risk factors based on 2 or more people.
It is important for homeowners to carefully consider the terms and conditions of these loans, as well as the potential risks and benefits of separating their mortgage from their property, before taking one out. Some of the factors that homeowners should consider include the interest rate, fees, and repayment terms of the previous loan, as well as the potential impact on their credit score and current financial situation.
In some regions, a decoupling loan is for homeowners who want to sell their property but have not yet paid off their mortgage and are thus unable to do so(Please read our article on Lien for more details). So, they will take out a property decoupling loan, which is used to pay off their existing mortgage. In Singapore, we typically call it a bridging loan instead.
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