Selling your current home and moving into a new one can be stressful enough, let alone worrying about your current mortgage and whether you’re able to carry it over to your new home.

Porting enables you to move to another property without having to lose your existing interest rate, mortgage balance and term. And, better yet, the ability to port also saves you money by avoiding early discharge penalties.

It’s important to note, however, that not all mortgages are portable. When it comes to fixed-rate mortgage products, you usually have a portability option. Lenders often use a “blended” system where your current mortgage rate stays the same on the mortgage amount ported over to the new property and the new balance is calculated using the current interest rate.

With variable-rate mortgages, on the other hand, porting is usually not available. As such, upon breaking your existing mortgage, a three-month interest penalty will be charged. This charge may or may not be reimbursed with your new mortgage.

Porting Conditions
While porting typically ensures no penalty will be charged when you sell your existing property and buy a new one, some conditions that may apply include:

• Some lenders allow you to port your mortgage, but your sale and purchase have to happen on the same day. Other lenders offer a week to do this, some a month, and others up to three months.
• Some lenders don’t allow a changed term or force you into a longer term as part of agreeing to port your mortgage.
• Some lenders will, in fact, reimburse your entire penalty whether you are a fixed or variable borrower if you simply get a new mortgage with the same lender – replacing the one being discharged. Additionally, some lenders will even allow you to move into a brand new term of your choice and start fresh.
• There are instances where it’s better to pay a penalty at the time of selling and get into a new term at a brand new rate that could save back your penalty over the course of the new term.

While this may sound like a complicated subject, I can explain all of your options and help you select the right mortgage based on your own specific needs.

Canadian homebuyers are showing “a high level of financial literacy,” according to Canada Mortgage and Housing Corporation’s (CMHC’s) 2011 Mortgage Consumer Survey that found both high levels of research and a determination to pay off mortgages quickly. 

The survey said 75% of respondents felt it “very important” to pay off their mortgages as soon as possible and that 39% had set payments higher than the required minimum. 

As well, 20% had made at least one lump-sum payment since obtaining their mortgage and 39% planned to reduce their amortization periods at their next renewal. 

Meanwhile, the survey found 80% of respondents had researched mortgage terms and conditions, 88% had a good understanding of how big a mortgage they could afford and 81% have some form of savings.

Professional assistance key
After deciding to look for information about mortgage options, half (51%) of recent mortgage consumers started with a mortgage or financial professional. The remaining half of respondents reported having started with family or friends, the Internet or a real estate agent.

But, throughout the process of obtaining a mortgage, 81% of recent buyers, at some point, relied on a mortgage professional (either a mortgage broker or lender) for advice and consultation.

More than three-quarters of recent buyers noted they received advice on mortgage terms and conditions, as well as whether to take a variable or fixed interest rate. More than 40% also received a recommendation to accelerate their mortgage payments in order to pay off their mortgages sooner.

Advice is not limited to just details about the mortgage. Recent buyers are also receiving recommendations to use specific professionals involved in the housing market such as home inspectors, lawyers and real estate agents.

Most recent buyers feel their mortgage professionals are listening to them throughout the process. Eighty-two per cent of recent buyers indicated that their particular mortgage professional – either a mortgage broker or lender – took the time to fully understand their financial situation and mortgage needs.

But, more interestingly, brokers and lenders who follow up with their clients after the mortgage deal are more likely to benefit by maintaining and increasing their business. More than two-thirds of mortgage consumers, who had been contacted by their broker or lender since their most recent mortgage transaction, completely agreed that they would contact the same lender or broker for advice on future mortgage needs compared to less than 50% of those who had not been contacted. Similar proportions exist for the likelihood to use the broker or lender for their next mortgage, and for the likelihood to recommend the broker or lender to a family member or friend.

Long-term investment
With the Canadian economy continuing to emerge from the economic downturn throughout 2010, mortgage consumer attitudes towards homeownership continue to be strong. A large majority of recent homebuyers (86%) agree that homeownership is a good long-term investment and this sentiment was generally shared by respondents in all regions of Canada.

The investment in homeownership is not entered into quickly. On average nationally, homebuyers took 11 months to plan their purchase. Those in British Columbia took nine months, while homebuyers in other regions noted planning their purchase ranged from 10 to 12 months.

As always, if you have any questions about the best mortgage product and rate options for you, or about your mortgage in general, I’m here to help!