Elevate Your Homebuying Strategy with Mortgage Portability
August 30, 2023 | Posted by: Keith Leighton
Elevate Your Homebuying Strategy
with Mortgage Portability
When it comes to getting a mortgage, one of the more overlooked elements is the option to be able to port the loan down the line.
Mortgage portability is a feature offered by some mortgage lenders that allows homeowners to transfer their existing mortgage terms, conditions, and interest rates from one property to another when they decide to sell their current home and purchase a new one. This feature can be beneficial for individuals who still have an active mortgage on their current property but wish to move to a new home without incurring extra costs or penalties associated with breaking the existing mortgage agreement.
Here's how mortgage portability generally works:
- Selling the Current Home: When a homeowner decides to sell their current property and purchase a new one, they may have an existing mortgage with a specific interest rate and terms. Instead of paying off the existing mortgage when selling the property, the homeowner can apply for mortgage portability.
- Transferring the Mortgage: The homeowner can work with their mortgage lender to transfer the existing mortgage agreement to the new property. The lender will assess the eligibility of the new property for porting the mortgage. This assessment usually considers factors like the property's value, the new mortgage amount required, and the homeowner's financial situation.
- Maintaining Terms and Rates: If the new property meets the lender's criteria for porting the mortgage, the homeowner can keep the original mortgage terms and interest rate on the new loan. This is advantageous, especially if the interest rates have risen since the homeowner initially secured their mortgage.
- Adjustments and Additional Financing: In some cases, the homeowner might need additional financing when purchasing the new property. The lender may offer the required extra amount at their current market rates. This could mean that there will be multiple portions of the mortgage, each with a different interest rate, but the original terms will still apply to the portion being ported.
- Fulfilling Conditions: Homeowners need to satisfy certain conditions to be eligible for mortgage portability. These conditions might include maintaining a good credit score, meeting the lender's criteria for the new property, and adhering to any legal or regulatory requirements.
- Fees and Costs: While mortgage portability can help save on penalties associated with breaking a mortgage agreement, there might still be administrative fees or charges for transferring the mortgage to the new property. It's essential for homeowners to understand the costs involved before deciding to port their mortgage.
It's important to note that not all mortgages offer portability, and the specific terms and conditions associated with mortgage portability can vary from one lender to another. If you're considering selling your current home and purchasing a new one while still having an active mortgage, it's advisable to discuss the possibility of mortgage portability and find out if you have this option (or the potential penalties if you don’t), and carefully review the terms and costs involved to make an informed decision. Contact your DLC Ideal Mortgage professional today for expert advice and a helping hand throughout your mortgage journey!