Porting is not much different than qualifying for a new mortgage. Truth is, if you are moving to a new town and a new job you may be on probation and not qualify for the mortgage. The lenders also have to approve the new property as well, so there are a lot more factors that need to be considered.
If you are porting the mortgage and don’t need any more money, as in the new house is the same value, then there isn’t much issue. However, what if the new home is more expensive and you need to increase the mortgage, then the lender has an opportunity to blend the two rates and your mortgage payment could go up. If you need to reduce the mortgage amount, then you may also face a penalty on the amount reduced.
Another factor not talked about is that you still need a down payment for the new home, it’s not just going to be a simple move over and continue on with your mortgage. The lender will usually take the full penalty out of the sales proceeds and refund it to you after the sale has completed. This process could take up to a month, meaning you need to cover the short fall at closing and wait for it to come back to you.
And last but not least how long of a period do you have to port your mortgage, did you know they range from 1 day to 120 day’s maximum? In the case of one day that mean the lawyer has to close both sales in that time frame.
While most mortgages have a portability feature, in the event you might need more money when you transfer the mortgage over to the new property, make sure you either have the right to blend in any new funds required, or can arrange the additional funds separately.
Talking to a Mortgage Broker about getting a Portable Mortgage (article linked to the Clarifying Mortgage Terms Page – Portable Mortgage definition- https://clientfirstmortgages.com/clarify-mortgage-terms/) is important if you have plans to move within the first five years. A portable mortgage allows you to transfer the amount and terms over to a new property without cost or penalty. The mortgage will, of course, have to be registered on title of the new property, so strictly speaking it is not identical in all respects.
There can be many different steps involved when porting a mortgage. It is important that you talk with an experienced Mortgage Advisor to determine if this will work for you. At Client First Mortgage Solutions we put the client first! Contact us today!
Original Article
https://dominionlending.ca/news/want-port-mortgage/
