Unlock Flexible Financing with Wrap-Around Mortgages

At Skyhook Capital, our Wrap-Around Mortgage strategy offers a creative and flexible financing solution that benefits both sellers and buyers. This innovative method allows a new loan to “wrap around” an existing mortgage—providing a streamlined way to structure deals without the constraints of traditional financing.

What Are Wrap-Around Mortgages?

A Wrap-Around Mortgage is a creative financing technique where a new, larger loan is created that incorporates the seller’s existing mortgage. In this structure, the buyer makes payments on the new loan, which includes both the original mortgage balance and any additional financing provided by the seller. The seller continues to service their original loan, while the investor benefits from potentially favorable terms on the combined balance.

How It Works

  1. Negotiation:
    The buyer and seller agree on a new purchase price and terms that “wrap” the existing mortgage into a new financing arrangement.
  2. Creation of the Wrap-Around Loan:
    A new loan is structured that includes the balance of the seller’s current mortgage plus additional funds as needed. The buyer makes payments on this combined amount.
  3. Payment Process:
    The buyer’s monthly payment is divided between servicing the existing mortgage and paying the seller for the additional amount financed.
  4. Title Transfer:
    The property title transfers to the buyer, while the original mortgage remains in the seller’s name, but is effectively managed through the wrap-around structure.
  5. Contractual Agreement:
    Detailed contracts outline payment terms, interest rates, responsibilities, and default remedies, ensuring both parties are protected throughout the transaction.

Benefits for Sellers and Buyers

For Sellers:

  • Enhanced Selling Power:
    Enable a faster sale by offering flexible financing that attracts more buyers.
  • Steady Income:
    Generate additional monthly income through the wrap-around loan, often at a higher rate than the original mortgage.
  • Simplified Process:
    Avoid the need for immediate payoff of the existing mortgage and reduce the time and expense of traditional listings.

For Buyers/Investors:

  • Low Upfront Cash Requirements:
    Access additional financing without needing to secure an entirely new mortgage.
  • Favorable Terms:
    Benefit from potentially lower interest rates and more flexible repayment schedules compared to traditional bank loans.
  • Streamlined Acquisition:
    Close deals faster by bypassing the conventional financing process, allowing you to seize opportunities in a competitive market.

Considerations and Risk Management

While Wrap-Around Mortgages offer significant advantages, it’s important to address potential risks:

  • Due-on-Sale Clauses:
    Some existing mortgages include due-on-sale clauses that may be triggered by a change in ownership. Our team works closely with legal experts to structure deals that minimize this risk.
  • Complexity:
    The financial and contractual arrangements can be more complex than traditional financing. Clear documentation and expert guidance are essential.
  • Payment Allocation:
    Both parties must clearly understand how payments will be divided between the existing mortgage and the additional financing. Transparent, detailed contracts help prevent misunderstandings.

Why Choose Skyhook Capital’s Wrap-Around Mortgage Approach?

Skyhook Capital has decades of experience in creative financing. Our expert team carefully evaluates each transaction to structure wrap-around mortgages that deliver:

  • Customized Solutions:
    We tailor each wrap-around deal to meet the unique needs of both sellers and buyers.
  • Risk Mitigation:
    With comprehensive due diligence and legal safeguards, we work to minimize risks associated with due-on-sale clauses and complex payment structures.
  • Speed and Efficiency:
    Our streamlined process enables fast closings, helping motivated sellers and savvy investors take advantage of market opportunities without delay.

Ready to Explore Wrap-Around Mortgages?

Wrap-around mortgages offer a powerful, flexible financing solution that can help you unlock new opportunities in real estate investing. Whether you’re a seller looking for a faster, hassle-free sale or a buyer seeking alternative financing options, our team at Skyhook Capital is here to guide you every step of the way.

Contact Us Today to learn more about how our Wrap-Around Mortgage strategy can work for you or to schedule a free consultation.