Is your mortgage portable?

Are you thinking about moving up or perhaps downsizing?

If so, there are several things that you should consider regarding your financing for planning the move.

You may believe that your mortgage is portable (you can take it with you) should you decide to move to a new property but did you know that both you and the new property must requalify for the mortgage.

You should speak to your mortgage broker to find out if you ‘qualify’ to port your mortgage before you start shopping for a new property or list your current property.

Definition of porting

  • This option allows you to transfer the interest rate and all the existing terms and conditions of your current mortgage over to your new property. The advantage of porting your mortgage is that you automatically avoid any prepayment fees for breaking your existing mortgage.

But not all mortgages are portable and every lender has different policies regarding the porting of their mortgages.

As an example, most variable rate mortgages and home equity lines of credit are not portable, which means you may not be able to take your current great rate with you to a new property and will be required to qualify for new mortgage financing.

If you stay with your current lender they may waive penalties.

Here are a few other points that you should consider to prevent any surprises.

Mortgage penalties

  • Most mortgages are portable but some lenders may not be willing to approve the moving of your current mortgage to a new property. You may have to seek new mortgage financing with another lender as your current lender may have issues with the property – self-managed strata properties, former grow-ops, age restricted properties, etc. Or you may no longer qualify for financing with this lender due to all of the changes to mortgage qualifications in recent months or changes in your own circumstances.
  • There can be a limited window of time for you to complete the porting of your mortgage. Some lenders only allow 15 days to complete while others will go up to 120 days. It’s important to know this information in advance as you plan your move.
  • If the sale of your current home completes before the purchase of your new home, a lender is going to collect any penalties that are owing and will not reimburse you until the purchase of your new home is complete. This needs to be included in your financial budget for the purchase of your new home.
  • Many lenders will not allow you to port and increase your mortgage so you may be actually looking at today’s rates on a new mortgage financing rather than porting the rate on your current mortgage.
  • If you currently have your mortgage with a credit union and you move out of their trade area or out of province, you most likely cannot take your current mortgage with you to a new property.
  • Whether you are moving up or moving down, with a little bit of planning and budgeting all can go smoothly. You may not be planning for a move when you initially secure your mortgage but a little planning for the future may save you thousands of dollars should you want or need to make a move to a new property.

Every lender has different policies regarding the porting of their mortgages and it’s important to secure your mortgage with a lender that not only has great rates but also the most flexible terms and conditions.

Your first call should be a chat with your mortgage broker to ensure you qualify for your financing before listing your current home and then you can move forward with confidence to your new home.

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About the Author

April Dunn is the owner and a Mortgage Broker with The Red Door Mortgage Group – Mortgage Architects. She has been assisting clients to purchase, refinance or renew their mortgages for over 20 years.

April has experience as a Credit Union manager, a Residential Mortgage Manager with a large financial institution and as a licensed Mortgage Broker. By specializing in Strategic Mortgage Planning she has the tools available to build a customized mortgage plan, with the features and options that meet your needs.

April provides a full range of residential and commercial mortgage financing options for clients all over the province of British Columbia and across Canada through the Mortgage Architects network.

Contact e-mail address: [email protected] or by phone at: 888-561-2679.

Website:  www.reddoormortgage.com

The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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