What You Need to Know about Porting or Transferring Your Mortgageguruadmin
If you just bought your dream home a few years back, but you’ve found yourself in a tough financial position and are now considering selling your home in the middle of your mortgage term, don’t assume you’ll have to break your mortgage. You may be able to port or transfer your mortgage. However, if you do decide to break your mortgage, be advised you will most likely incur additional penalty fees.
What does it mean to port your mortgage?
What this means is that you’d take your current mortgage, rate and terms and transfer them from one property to another property. So, essentially you’ll have to purchase a new property and sell your current property.
When you purchase a new property, it’s likely that you’ll have a larger mortgage too. In this case, you’ll receive an offer from your financial lender to blend and extend-which is the weighted average of your current mortgage and rate, combined with the money you require for your new new mortgage rate.
If you’re considering the option of porting your mortgage, then you may want to see if mortgage rates are lower than what your lender is offering before you do so, as this would be the ideal time to port. Keep in mind that not every lender will allow mortgage porting, so it’s best to consult with your broker or lender.
Why mortgage porting should be an important consideration, even before purchasing?
This is also an important consideration when choosing a lender before you purchase, especially if you have intent or uncertainties about moving or selling during your mortgage term.
Not all mortgages are portable, variable-rate mortgages are a prime example as they cannot be transferred. You want to ensure that this feature is available, should the need arise. Your mortgage professional can advise you about which lender offer porting and which don’t. Porting can save you thousands between transferring it and avoiding prepayment penalties.
Why many people consider transferring their mortgage?
If you currently have a great interest rate, that you want to hold onto during your mortgage term, then you may want to port your mortgage. Although this is one reason that’s worthwhile, the most common reason that most mortgage holders decide to transfer their mortgages is to penalties, such as those of prepayment. As such, most people try to avoid this.
Porting a mortgage is a means of protecting your finances and mortgage from rising interest rates.
What qualifies you to port your mortgage?
The lender will be the person to determine whether or not you can actually port your mortgage. In their determination, they’ll ensure you:
- Still have a stable source of income
- Have debt-to-income ratios that are acceptable
- Have a property appraisal that align with your borrowing request
If you fail to meet all appraisal criteria for your property, than you may have to pay the difference. Therefore, it’s best to be in a good financial position so your lender sees you as a low-risk borrower.
For more information on porting or transferring a mortgage or any other mortgage solutions, contact the mortgage experts at AKAL Mortgages.
When we say Yes! We stand behind our promise.