Porting a Mortgage

Porting a Mortgage

Porting a mortgage can be a great option when moving to a new house as porting can help you avoid a penalty from breaking your current mortgage.

I am able to assist with porting and love helping clients through the process. There are are a lot of important points to know when porting a mortgage.  I will be able to go over them with a you to assure there are no challenges.

 

Porting a Mortgage

 

Qualifying

Porting a mortgage and qualifying for a new mortgage looked at the same by banks and lenders. If you want to port a mortgage, a new application and credit check will need to be completed.  With that, you need to apply and be approved for this new ported mortgage. If you are changing homes due to a marital breakdown, loss of job, reduction of income, credit problems and so on, you may face challenges.

Learn more: How to Build Your Credit Score

 

Probationary Period

If you are moving to a new location for employment and your new employment has a probationary period, this could be a challenge.  Typically, you must complete the probationary period before you will be able to qualify to port the mortgage.

 

Timing

If you are looking to buy a house before selling your existing property, if your current home does not sell in time before closing on the next home, then this can cause challenges with porting. The application would change from applying for a port to applying for a whole new mortgage.  This is because you will still need to carry your existing mortgage. This will have a factor on your debt servicing ratios.

Plus, if you need the funds from the sale of your property for the down payment on the next home, the funds will not be available if your existing home does not sell in time.

Learn more: Down Payment on a House in Ottawa

 

The New Property

The lender needs to approve the new property that you are looking at.  However, some properties may not be acceptable. For example, if you are moving to a condo where the square footage is below the lender’s minimum requirements.

 

Needing More Funds

If need to port and increase your mortgage, many lenders will blend your old mortgage funds at their existing rate, with the new funds at current rates. Other lenders will add the new funds as a separate mortgage with its own term and rate.  This can be confusing for some by having two mortgages, two payments, two renewal dates and so on.

Learn more: Mortgage Renewal

 

Needing Less Funds

A penalty may charged when looking to port the mortgage and decrease the amount, such as when downsizing.

 

Down Payment

Even with porting a mortgage, it’s important to note that the new property will still need a down payment.

 

Mortgage Insurer (i.e. CMHC)

If you have an insured mortgage, such as with CMHC, it’s important that you ask for the mortgage insurer premium be ported.  Sometimes this is not done automatically and you will end up paying the premium all over again.

Learn more: Porting a Mortgage on YouTube