The idea of porting a mortgage technically means to transfer an existing mortgage from one property to another, basically moving the debt from one home purchase to another, providing the original home is sold and the rates & terms of the mortgage remain the same. In a nutshell “porting a mortgage” means, you would be taking your original mortgage terms & amount owed and simply swapping it over to your new home.
When Can I Port A Mortgage?
With porting a mortgage, there are some scenarios which are most common. Generally, people looking to swap their mortgage over to their new home fall into 3 categories. Let’s compare.
Firstly, the most common scenario is when you are transferring the exact same mortgage to a new property. In this scenario, keeping the same rates & terms would be easier for you than terminating and reinstating a new mortgage, provided the amount borrowed is nearly the same. This would be the most hassle-free scenario and would prevent you from doing a total refinancing overhaul.
Next up, the second most common scenario is when you, the buyer, need to borrow more money to purchase a new home than already borrowed from the previous property. This kind of upgrade will be added to the original or “ported” mortgage. Basically, if the new house costs more, the mortgage terms and amount of the first home will be moved over, and the additional costs will be added on in a separate contract for you.
Lastly, porting a mortgage is often seen when you have borrowed more than you need for a new home. For example, if you are buying a home of lesser cost than your initial mortgage, you can keep the terms & rates, but be given back the remaining difference of the new purchase. This scenario can prove to be incredibly beneficial as it can help chip away mortgage debt faster than expected.
What Rate Will I Get On The Additional Contract?
If you fall into the category of the second scenario, your additional home costs will be drawn up on a separate contract. While the rates of your ported mortgage will remain the same, your new contract has some room for negotiation. Often a financial lender will suggest a blended rate, between your past mortgage and current market rate, but negotiating a reasonable price is always encouraged.
Can Anyone Port Their Mortgage?
Unfortunately, not every mortgage can be ported. The biggest factor in determining the portability of your mortgage depends on your lender. The best approach is to understand the terms and conditions of your mortgage contract before you sign it. Always consider the future and the variables it might hold when selecting the best financial plan. As 70% of all mortgage holders do not reach the end of their term on their existing mortgage, many people move into new homes sooner than expected in their contract, allowing for changes, such as porting, to be taken into consideration. On the very likely chance you will sell your home before the end of your mortgage term, it would be a good idea to consider negotiating whether or not your mortgage can be ported before you put your pen on the dotted line.
Be sure to know the ins & outs of your mortgage, including whether or not your mortgage is portable before you sign off on it. Give me a call anytime at 705-315-0516 if you have any questions about your current mortgage or if you’d like to explore options on how to port your existing rate & terms. I’m always here to help give you sound financial advice and to help you plan for your financial future.