Moving into your new house can be stressful despite the excitement and happiness it follows. Your choices in acquiring a home loan to support your purchase can be both emotionally and mentally draining. Will you take your mortgage with you or will you avail of a new one instead?
Leaving your property and transferring it into a new one does not necessarily mean you are to apply for a new mortgage plan before settling in.
We will give a brief rundown on the two types of mortgage transfers you can avail of to make your home migration less strenuous and more enjoyable.
Transferring Your Mortgage Explained
Transferring a mortgage means you are exiting your current mortgage and transferring it to another property that you want to purchase – together with its current home interest rate and term (as long as your mortgage lender agrees).
Porting a mortgage appears to be easy and simple but it is not. It is tricky more particularly if you are moving into a more expensive property. This will result in costing you more than applying for a second mortgage.
Type 1: Transferring Mortgage to a Cheaper Property
Transferring your mortgage could be a more attractive option if you are not planning on borrowing extra money, downsizing, or buying a property at a lower value.
Your lender will conduct an affordability check based on their current lending criteria before you can proceed with your mortgage transfer. You need to make sure that you have a good credit score rating to qualify.
Look for a reputable mortgage lender to help you with this. This will avoid unnecessary complications and prevent unscrupulous individuals from taking advantage of your financial position.
Type 2: Transferring a Mortgage to a More Expensive Property
This can be tricky and more challenging to pull off. Moving into a more expensive house can be costly to borrowers. Your lenders will make sure that you can afford to pay back your mortgage plan.
If you can source out money to pay for your new home then your mortgage loan is more likely to be subjected to different rates and terms compared to your principal mortgage. Be careful when treading this path in deciding to pit your mortgage transfer against an expensive property.
Spend a moment soul searching while asking, “Is this house worthy of my time and finances?” before taking the plunge!
Mortgage Porting Advice
Your lender should mention porting mortgage as one of your available options (if they offer this service) before signing your mortgage contract.
Remember mortgage porting means your new home will inherit your existing home’s mortgage along with its current rates and terms.
Most lenders allow porting or transferring mortgages while others do not. For example, most variable-rate mortgages cannot be ported because their rates fluctuate against the current market premium.
Ask your lender if your mortgage is portable. It can be cumbersome to find portable mortgages since they need to satisfy a particular criterion before extending you one.
Am I Qualified for a Mortgage Transfer?
There is no guarantee that a mortgage transfer is your best option or not. A portable mortgage allows you to transfer your mortgage to your future home purchase as noted beforehand.
It makes sense to port or transfer your mortgage when your current mortgage rate is lower than the rate currently offered by the market. This will make your amortization payments lower than your current rate.
It is highly recommended to discuss this with a mortgage professional if you are deciding on porting your mortgage. They are equipped with the skill to negotiate on your behalf and are knowledgeable of all lending criteria.
There are no shortcuts when choosing whether porting your mortgage is the best choice or not. It is important to inquire about your credit standing before proceeding with your mortgage port.
“Is it possible to find out if I can get a mortgage credit report?” is a question often asked too many mortgage advisers. Have a word with your financial planner and know how to proceed intelligently.
Lastly, conduct your own research into mortgage porting. If everything turns out positive then commence to port with confidence.
Give Enough Thought in Planning Your Mortgage Transfer
Most mortgages are portable as a rule of thumb. However, this does not mean that you can quickly get approved to port your mortgage into your new home. You are required to undergo a credit score investigation and financial liquidity check to make certain that you meet your mortgagee’s criteria.
Do take time to consider your overall financial outlook. See to it that it makes wise financial sense to port your mortgage rather than taking on a second—or even a third–mortgage.
If you satisfy these and prove to be eligible then proceed with your planned mortgage transfer.
We are Oshawa specialists in mortgaging and in credit score restructuring for 9 years running. Our offices are spread across Canada and we offer financial advice as well as mortgage assistance.
Feel free to contact us at (416) 825 0142 or send an email to faizal.garasia@dominionlending.ca.
We are more than glad to help you in deciding where and how to apply for your mortgage transfer.