Mortgage Assumption Contract Template for Philippines

The Mortgage Assumption Contract is a crucial document used in Philippine real estate transactions when a new party wishes to take over an existing mortgage from the original borrower. This arrangement, governed by Philippine civil law and banking regulations, allows for the transfer of mortgage obligations while maintaining the original loan terms. The document is particularly relevant in situations where selling a property with an existing mortgage, especially when the current mortgage terms are favorable or when the assuming party wishes to avoid new loan origination costs. The contract must comply with requirements set forth by the Bangko Sentral ng Pilipinas (BSP) and include specific provisions required under Philippine property and contract law. It typically requires the explicit consent of the lending institution and must address various aspects such as payment terms, property transfer, and the release of the original mortgagor from future obligations.

1. Parties: Identifies and provides full details of the Original Mortgagor (Seller), the Assuming Party (Buyer), and the Mortgagee (Lender)

2. Background: Recitals explaining the existing mortgage, property details, and the intention to transfer the mortgage obligations

3. Definitions: Defines key terms used throughout the agreement, including Property, Original Mortgage, Outstanding Balance, and Assumption Date

4. Assumption of Mortgage: Core agreement where the assuming party takes over the mortgage obligations and the original mortgagor's rights and responsibilities

5. Purchase Price and Payment Terms: Details of any equity payment to the original mortgagor and future payment obligations

6. Representations and Warranties: Statements by all parties regarding their capacity, authority, and the status of the mortgage and property

7. Mortgagee's Consent: Express consent of the lender to the mortgage assumption and any conditions attached

8. Transfer of Rights and Obligations: Detailed provisions regarding the transfer of all mortgage-related rights and responsibilities

9. Release of Original Mortgagor: Terms of release of the original mortgagor from future obligations

10. Governing Law and Jurisdiction: Specifies Philippine law as governing law and jurisdiction for disputes

11. Execution: Signature blocks and notarization requirements