Understanding the nuances of mortgage portability is one of the important aspects of having a mortgage. If you decide to move out of your home and into a new development project or apartment, then you can port your existing mortgage with your terms and interest rates allowing the lender to provide capital for the new home.
You can avoid the prepayment penalties associated with breaking your mortgage, as you are not breaking it but simply porting it through the same lending institution. Knowing key concepts, such as the blended rate, can help you improve your investment opportunity ROI and focus on getting the right house at the right rate.
E.g., if your current mortgage is around 3% and your current offer for the new property is around 5.7-6%, then you could have a blended rate of around 4.2-4.5%, depending on your lender’s criteria. You can talk to the experts at sHelto to understand how the new blended rate will impact your mortgage.
When porting a mortgage can make sense for you
Porting a mortgage can make sense for you in the following scenarios. You can check the rates of apartments, houses, and condos in your preferred location, so that you can get started with your dream home.
New job opportunity in a different city
When you have a new job opportunity in a different city but have already invested in a mortgage in the existing city, then porting will make more sense for you. Depending on whether the new project is higher priced or lower priced, the process may differ slightly as well as the overall rate.
Starting a family
If you are starting a family and need more space or more bedrooms for the kids, then you need a bigger house. That’s where the experts at sHelto come in and provide the right financing solutions. You can select the house of your dreams and our experts can handle the porting the mortgage part depending on your mortgage balance, terms, rates, and other criteria.
Bigger house more space
If you have good credit and have maintained a healthy relationship with your lender, then you can opt for a larger mortgage for a bigger property. This can help you expand to the home of your dreams and live a life of luxury and comfort. You can cover the difference between the bigger mortgage and the existing one, and start the portability journey.
Better location
If you find a house in a location that has a higher growth potential, or is in a neighbourhood with better schools and facilities, then porting your mortgage over to the new house makes sense. You can preserve your existing mortgage specifications and get a new home in a different location. This can be beneficial for a number of reasons, such as when seeking a different lifestyle from a new home project.
Core benefits of mortgage porting
These are some of the major benefits of porting your mortgage over to a new project. You can benefit from a range of factors such as the ones below, when looking to get mortgage portability in Canada.
Saves money
You can avoid the prepayment penalties associated with breaking your mortgage early, as well as save on potential high mortgage payments if you break your mortgage. Not all mortgages are designed equally, as different lenders may provide different types of solutions.
Better flexibility
You can opt for a blended rate, which is one of the best solutions when you have an existing rate that may not be within restricted mortgages. You can talk to your mortgage lender to learn more about whether your mortgage is restricted, as you can otherwise opt for other solutions.
Lower monthly payments
Your overall monthly payments, when compared to breaking your mortgage and starting a new one, can be lower overall. You may get more favourable terms from your existing lender when you choose to port your mortgage rather than break it and start fresh with a new lender.
Option for better house
You can always choose a better house that suits your unique requirements when it comes to new housing projects. You can easily select a home that is better connected, in a better location, or has a better overall aesthetic, and opt for financing through bridge loans to cover the down payment. Porting mortgages allows the freedom to select a better house.
Here’s how you can port your mortgage
You can talk to your broker who can provide more information about how you can port your mortgage successfully. You can understand the various steps involved and get started by scouting your preferred house in a new location when you’re ready.
Talk to your lending institution
The best first step is to talk to your lender about the prospect of mortgage portability. Your new mortgage rate, mortgage contract, and interest rate types, can be discussed with the representative from the lender. You can talk to a broker who can provide more information about the right types of mortgage portability solutions.
Understand eligibility
Your porting a mortgage eligibility will also be analysed through the lender’s internal processes. There are several considerations, such as variable rate mortgages, mortgage term impact, and preventing pay prepayment penalties, prior to starting your ported mortgage. You can talk to the mortgage broker from sHelto, to understand how your mortgage balance and your existing terms can impact your port.
Know porting time
There is a general porting time of between 30 and 120 days, which allows for your lender to understand your requirements from porting your existing mortgage. This can help you calculate the exact time available for you to know about the down payment requirements, the future mortgage payments, the fixed rate mortgages available through the port, etc. You can make an informed decision during this time.
Bridge financing
You can talk to your lending provider about bridge financing which allows you to carry the mortgage on two properties for around 90 days or so. It is a short term financing solution that leverages the current equity in the house to finance the down payment (and other costs) for the new house. You can expedite the purchasing or porting of the mortgage while leveraging your existing house for the down payment of the new one.