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Importance Of Mortgage Portability

General Angela Calla 3 Nov

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’re 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.

As always, if you have any questions about mortgage   portability or your mortgage in general, I’m here to help!

Angela Calla 604-802-3983