Have you ever heard of porting your mortgage? It is a great alternative if you find yourself in a position where you need to sell and buy a new home before your mortgage term has expired.
How Does It Work?
Essentially you are just transferring the terms of your current mortgage to a new property. That means that, if approved, you’ll get to keep your current interest rate and term and transfer it to the new property. If the new property is more expensive than your current property, you will have to borrow the additional funds to make up the difference. Any additional money you borrow, however, will not be subject to your locked in interest rate. New money will be handled under current interest rates and result in an overall blended rate for your mortgage.
Who Takes Advantage Of This?
Most often people who have managed to secure great interests and who are selling their property before their mortgage term is up. Porting makes it possible to avoid paying any penalty fees, fees which you would be required to pay for breaking your mortgage contract if you simply sold the home.
The Fine Print
Although the concept is quite simple, you must remember that its not really as simple as transferring the mortgage over. In fact, you will have to go through the approval process again, which means credit checks and you will need a lawyer again to deal with paper work. There may also be applicable fees for the process, depending on your bank or lender. This is something you should discuss with them when deciding if porting is the right choice for you.