Do I have to pay off my loan if I subdivide?
Your property, all of your property, is security for your loan. If you sell off a piece, the lender has less security. As well, your mortgage agreement likely forbids the sale of some or all of the property without the lender’s permission or without the loan being payable in full the moment you sell.
Your choices look like this:
___You can sell the property and pay off the current lender.
___You can sell some of the land and use the sale proceeds to pay off your existing debt.
___You can refinance the current loan under terms which allow you to sell off a portion of the property.
___You can get a “release” from your lender allowing you to sell off a portion of the property and keep the current loan in place. Usually this arrangement requires that some or all of the sale proceeds are used to reduce the current mortgage debt.
Please speak with your lender for details and to local real estate brokers for marketing advice.
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