In today’s Canadian real estate market, many homeowners desire to upgrade to bigger and better homes and cash in on the opportunity. However, selling their home may seem next to impossible if they are locked into a mortgage. Some may even think that upgrading or downsizing is out of reach. But, many property owners are unaware that they may be eligible for a ported mortgage, which offers a flexible and excellent opportunity for residents in Canada.
Porting a mortgage involves transferring the outstanding amount of a current mortgage to a new one, making it helpful for homeowners who want to expand their family, relocate, or terminate their existing mortgage without incurring penalty fees.
Let’s delve deeper into the details of porting a mortgage.
Process of Porting a Mortgage
The initial step is to carefully review your mortgage contract or talk with your lender to confirm if your mortgage can be transferred. Some mortgages may have restrictions or fees associated with porting, so paying close attention to the legal documents is crucial. Furthermore, before embarking on your home search, obtain a mortgage agreement in principle from your lender. This will give you an accurate picture of your budget and whether you can relocate.
Moving on, you can start looking for your new home after obtaining the agreement. Then apply to your lender to transfer your mortgage. Lastly, sell your present house and buy your new one after your application is granted. Your existing mortgage will be transferred to the new property by your lender.
How to Port a Mortgage in Canada?
If you’re a Canadian seeking to buy a new home, transferring your mortgage may be a good opportunity, particularly considering the historically low mortgage rates.
However, speaking with your bank before embarking on this journey is important. While many buyers search for properties before speaking with their lender, this can ultimately lead to paying more in the long run.
If you’re simultaneously selling your current home and purchasing a new one, you may wonder how to secure the best mortgage rates while porting your mortgage. Typically, people port their old mortgages for lower interest rates. However, due to various financial barriers and poor credit history, your lender may reject your request when porting your mortgage for a new home.
So, while porting your mortgage can lead to lower rates, it’s important to consider all factors before making the final decision.
Port Your Mortgage under Expert Advice
Consulting with real estate professionals is a smart move when it comes to porting a mortgage. These professionals have industry knowledge and can assist you in finding the best rate and terms for your mortgage.
They can also connect you with mortgage brokers who can help you navigate mortgage rates and ensure your mortgage works in your favor. By working with a professional, you can potentially save thousands of dollars in the long run and set yourself up to be able to port your mortgage if you choose to do so.
So, if you’re in the market for a new house, consider seeking guidance from real estate professionals to ensure you make the best financial decisions.
What are the Disadvantages of Porting a Mortgage?
One major potential drawback of transferring a mortgage is that it may limit your ability to explore other options and compare your mortgage rate with other available offers. If other lenders offer lower interest rates, you could save significant money on interest payments by switching to a different lender.
Furthermore, if you decide to borrow additional funds when transferring your mortgage, you may end up with two separate loans and a higher interest rate on any additional borrowing.
Lastly, it is important to remember that not all lenders allow mortgage porting, and whether or not you are eligible will depend on the lender’s specific affordability requirements.
After Porting Mortgage: What’s Next?
Once you have worked out the details of porting your mortgage, you can shift your focus to moving. You will clearly know your new mortgage’s payment amount, expected rates, and term end date. However, you will still need to deal with closing on your old home and addressing any remaining loose ends.
Porting your mortgage is an excellent idea, regardless of the amount of your mortgage. It can create numerous opportunities for finding a new home, help you maintain the same payment amount irrespective of your location, and has the added benefit of not affecting your credit score like breaking or defaulting on your mortgage.
Final Words
To sum up, porting a mortgage offers numerous benefits, such as keeping your payment the same, allowing flexibility to move to bigger or smaller homes, and avoiding penalty fees associated with breaking a mortgage.
Moreover, consulting with industry professionals can provide valuable insights and answer your questions. Porting is an excellent way for lenders to retain customers and build relationships for future refinancing.
To get started with porting, check the eligibility criteria of your current mortgage and determine the fees associated with breaking or porting. Once you make up your mind, you can search for your next home or investment property immediately.
Remember that selling your current property beforehand can make the process smoother, and consulting with your lender can provide helpful guidance. Good luck with your house hunting!
