The ability to move your mortgage, along with all of its terms and conditions, from one house to another is known as mortgage portability. This saves homeowners from having to pay a prepayment penalty for breaching their contract. A thorough credit check and property appraisal will be performed by your lender in order for you to be approved for a portable mortgage. Compared to the typical re-qualification process for a new mortgage, this is a far more extensive procedure.
Early repayment penalties may apply if you wish to pay off your mortgage before it expires but are unable to do so because you are relocating. This is because it is against the conditions of the agreement for you to end the mortgage deal early.
Thankfully, there is a way to leverage mortgage portability to avoid early repayment penalties when you relocate.
You can move your mortgage to a new house through this approach without violating the terms of the agreement. Because you won't be paying for the application and credit checks you would normally have to make when applying for a new mortgage, this can save you a ton of money. However, only borrowers who satisfy specific requirements are eligible for mortgage portability. These include the need that the amount of the mortgage to be transferred be equal and that the sale and acquisition of the new residence occur on the same day.
It can be more cost-effective to transfer your mortgage to your new property rather than incurring the prepayment penalty associated with breaking your current mortgage when you have a terrific rate locked in and decide to sell your house. This might save you money on a brand-new mortgage and provide you with assurance that the cost of your new house will fit within your budget.
However, while thinking about mortgage portability, there are a few important things to remember. Initially, not all lenders permitted this function. To find out the requirements for porting, you should speak with your mortgage broker or your existing lender. Second, different lenders will provide you with different terms for moving your mortgage; some may only give you 30 days, while others may give you 120.
Furthermore, your new residence must be eligible for the same financing as your previous one, which implies that it must satisfy all debt service ratio and mortgage stress test prerequisites. Finally, you should be informed that you might still be required to pay legal expenses and appraisal fees associated with the acquisition of your new residence.
Make sure that porting your mortgage is an option under your contract before proceeding. Certain lenders solely provide the feature on a limited product, or you would have to fulfill particular requirements in order to be eligible.
In the event that your lender approves it, you must be aware of any associated costs. It's possible that you'll have to pay for the mortgage valuation on your new home in addition to an arranging charge.
If, however, interest rates have increased after you obtained your initial house loan, this is a great method to save money. Not all mortgages are transferable, so it's critical to understand your lender's policies. If you're thinking about using this feature, it will also be helpful to get advice from a qualified mortgage broker.
