Mortgage Porting in Canada 2023: When you port a mortgage, you move a current mortgage from one home to another while keeping the same lender, interest rate, and terms.
Why would you want to move your mortgage?
Homeowners who are moving but want to keep the good terms of their current debt may benefit from this financial move.
It might be a good choice when you think about how much it might cost to break a mortgage contract and start a new one, which might have higher interest rates, especially in today’s market.
If you have a rate that is much lower than the rates that are being offered right now, the fact that you can move your mortgage will be very helpful.
A word of caution: your credit might not be transferable.
That being said, not all debts can be moved. Mortgage portability depends on a number of things, such as the lender’s rules and the mortgage holder’s current financial state.
The worst part is that many people who buy a home don’t think about when they’ll need to sell it, so they don’t think about portability when they buy, which could cost them in the long run. It worked for me.
Homeowners should know the exact rules and restrictions that their lender sets, as these can have a big effect on whether or not moving is possible and what the benefits are.
An important part of the qualifying requirements is usually buying a new home at the same or a higher price than the old one.
Mortgage porting is more than just the move. Often, extra changes need to be made, like raising the mortgage amount to cover the cost of a more expensive new home.
These changes could come with extra costs and tests to see if you qualify. Although porting a mortgage can be a way to save money, homeowners need to carefully weigh the pros and cons, such as possible changes in the market or extra costs, in order to make an educated choice.
It’s time to learn more about moving your home to Canada.
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What does “porting a mortgage” mean?
By “porting” a mortgage, a borrower can move their current mortgage from one home to another, keeping the same terms and interest rate.
This financial choice can be a smart move for people who want to keep their current mortgage terms instead of looking for a new loan.
In the US, mortgage moving doesn’t happen very often because you can lock in an interest rate for the life of your mortgage. But in Canada, where debts are only good for a certain amount of time before they have to be renewed, porting is very helpful.
What is the process for moving a mortgage?
When someone chooses to port their mortgage, they usually have to make sure that the sale of their old home and the purchase of their new one happen within a certain amount of time, usually 90 to 120 days.
If you sell your house today, you’ll only have three to four months to buy a new one. After that, your old mortgage will end, and you’ll have to pay any late fees to get out of it.
For instance, if a homeowner has a mortgage with a 3% interest rate and is able to move it to a new property, they would bring the rate and the remaining mortgage term with them to the new home within the time frame set out in their current mortgage.
If the price of the new home is higher than their current rate, they may have to mix their current rate with the new rate to get the extra money they need.
The three best things about moving your mortgage
While obtaining a mortgage does have some perks, the main ones are saving money and keeping good loan terms.
Keeping borrowing terms and interest rates the same
When a homeowner ports a mortgage, they can take their current mortgage rate and terms to a new house.
They could keep the fixed or variable-rate mortgages they already have, which might be better than the rates that were available on the market when they moved.
If the new mortgage needs more money, the lender may offer a combined rate that combines the current rates with the rates on the market for the extra amount.
You might also want to keep some other perks of your mortgage. Take the case where your mortgage has a very good buyout arrangement in case you decide not to port. That’s something you should bring with you.
Getting rid of buyout fees and fines
If a mortgage can’t be moved or the homeowner doesn’t want to, they may have to pay big fees for breaking the mortgage contract and paying off the loan early.
Most of the time, these fines are equal to either a few months’ worth of interest payments or a certain percentage of the principal sum. Your buyout penalty will usually be higher if you have a fixed-rate mortgage than if you have a variable-rate mortgage. It will also depend on how much time you have left on your loan.
Don’t forget that even if you port your mortgage, there may be fees, such as processing fees, that come with the process.
Cut down on your monthly mortgage costs.
If you move to a home with a similar price, your monthly payments might stay about the same, especially if the interest rate and mortgage term are moved without any problems.
But if a homeowner moves to a more expensive home and gets more money at a higher interest rate, their monthly payment might go up.
On the other hand, moving to a less expensive home could mean lower monthly bills, which could give you more financial freedom.
How to Move Your Mortgage:
1. Look over your deal
Before beginning the porting process, a person must first check their present mortgage contract to see if porting is allowed and if so, under what circumstances.
2. Talk to your lender
After that, the borrower should call their current loan and let them know they want to port. Before buying a new home, it’s important to make sure that the mortgage amount and payments will still be manageable.
3. Get all the papers you need
Get the papers you need and look over any changes to the mortgage terms, like mortgage life insurance changes.
4. Making deals with the lenders
To negotiate with mortgage lenders effectively, you need to know a lot about the rules and possible benefits of the ported mortgage.
People who want to borrow money should find out if the closing costs for selling their old home and buying a new one can be combined or lowered.
You could also talk about combining their loans and increasing the terms of their mortgage.
5. Be ready to leave your provider if you have to.
If a borrower doesn’t like what a lender offers, they should be ready to discuss terms or look for other lenders.
6. Finishing up your new debt that was ported
You can help make sure that all the paperwork is in order and that the mortgage life insurance and other important information is moved correctly to the new mortgage agreement by working closely with the lender or a mortgage broker.
7. Get ready to pay the closing costs
Homeowners should know about any closing costs that come with the deal; these will be sorted out in the next step.
**Also, find a new place to live!
When it comes to debt porting, this one is pretty important but gets forgotten a lot of the time. When looking to buy a home, you don’t want to rush into a decision, but you also don’t want to be in the early stages of looking and already be 85 days into the 90-day window for porting your home.
Putting things off is the last thing you want to do if you want to keep your solid debt.
When is the best time to move your mortgage?
Homeowners should choose mortgage porting if they can keep the terms and lower interest rates of their present mortgage. This is especially true if the terms of the mortgage are better than what the market offers at the moment.
When interest rates have gone up since the first mortgage was taken out, porting becomes even more appealing.
Besides that, you might have a bad buyout arrangement or a lot of terms left on your old house. In this case, you might not only be moving for better rates, but also to avoid the big penalty for early repayment that usually comes with fixed-rate mortgages that have a long time left to be renewed.
Regardless, the process of mortgage moving requires meeting certain requirements, which usually include getting credit approval and figuring out how much the property is worth.
How often does porting a debt happen?
Mortgage porting happens at different rates based on the housing market, the economy, and the policies of each lender. The benefit of porting can become more or less popular among landlords as interest rates change.
One example is people who locked in low fixed-rate mortgages during the pandemic. They may find that moving their mortgage is a big benefit that saves them a lot of money on their monthly payments.
On the other hand, people who got their mortgage when interest rates were high might not want to port it if they decide to buy now that policy and current mortgage rates have gone down.
In places like Canada and the UK, mortgages are often moved from one place to another. In the US, on the other hand, it doesn’t happen very often because of how mortgages are set up there.
Who can apply and what they must do
It’s too bad that not all debts can be moved. Investors can often get a better deal on mortgages right away if they have fewer extra features, like moving. This can mean a lower interest rate. In the end, though, it bites them when they find out that their mortgage doesn’t allow moving.
This happened to me with my first mortgage, and it cost me a couple hundred dollars a month in higher interest rates and a penalty for paying off the loan early.
How do I find out if moving is allowed by my mortgage?
Homeowners should first look at their mortgage deal to see if their mortgage is portable.
There are parts of this paper that say if the mortgage can be transferred or not. It’s important to know that portability isn’t a trait that comes with all loans; it has to be specifically stated in the loan terms.
If you’re having trouble reading your mortgage paper, just call the person who holds your mortgage and they’ll help you out.
It depends on how your lenders handle things.
Each lender has its own rules about mortgage moving. They might set rules about when things have to happen, like needing the sale of the present home and the purchase of the new one to happen at the same time. Of course, they could also give you a set amount of time to do it.
Lenders may also only allow porting for debts that have not yet gone into default.
At the end of the day, you should check the mortgage holder’s rules or call them.
Check your credit to make sure it’s good.
For mortgage moving to go through, you need to keep your credit score and finances in good shape.
Lenders will look at the borrower’s finances again to make sure they are still creditworthy.
Otherwise, they might say no to your request to port the mortgage if your credit is so bad that you can’t get that rate or amount of money anymore.
Basically, you have to follow what the loan says to the letter.
You will need to get a new property appraisal.
This rule seems like a pain, but you had to deal with it when you bought your first home. The bank needs to know about the place you’re borrowing money for, so they need to do a property assessment.
Most of the time, unless you are clearly paying too much, the bank will be fine with the property you want to buy. In that case, the bank is helping you out. I don’t think this is a big deal.
Which banks let you move your mortgage?
There are way too many banks that offer mortgage porting to name them all. Besides this, you can also port your mortgage to a number of B-grade lenders and independent lenders.
Ultimately, it depends on the terms of your mortgage as a whole. The terms of your mortgage would have said that you could port your identity.
Common things you can do if you can’t move your mortgage
Finance your home again
When you refinance, you pay off your old debt and make a new one with possibly different terms and rates.
Porting a mortgage, on the other hand, means moving an existing mortgage to a new home with the same rates and terms.
If homeowners can get better interest rates or better mortgage terms, they may decide to refinance their mortgage.
Getting a debt
Assuming a mortgage lets a buyer take over the terms of the seller’s debt as part of the deal to buy a house. This could be a good thing if the terms of the current mortgage are better than the market rates.
A lot of people don’t have assumed debts these days.
Getting a second debt with the money you have saved
A second mortgage lets homeowners borrow against the wealth they’ve built up in their home while still living there. This is not the same as porting because you are getting a new loan instead of moving your current mortgage.
If you have a lot of equity in your home, a second mortgage may be a good choice. It gives you money without affecting the first mortgage, which could be helpful for homeowners who need money for big expenses.
