Recently a video appeared on Linkedin and a few other places singing the praises of porting your mortgage and making it seem like a walk in the park. If you have ever done one, then you would know that it is anything but that scenario.
Porting is not much different than qualifying for a new mortgage, the video talks about the client moving to a new town and just porting their mortgage along with them. Truth is if that you are moving to a new town and a new job you may be on probation and not qualify for the mortgage. The lenders also have to approve the new property as well so a lot more factors that need to be considered.
If you are porting the mortgage and don’t need any more money as in the new house is the same value, then there isn’t much issue. What if the new home is more money and you need to increase the mortgage then the lender has an opportunity to blend the two rates and your mortgage payment could go up. If you need to reduce the mortgage amount, then you may also face a penalty on the amount reduced.
Another factor not talked about is that you still need a down payment for the new home it’s not just going to be a simple move over and continue on with your mortgage. The other thing that happens is that your lender will usually take the full penalty out of the sales proceeds and refund it to you after the sale has completed. In some cases, this process could take up to a month meaning you need to cover the short fall at closing and wait for it to come back to you.
And last but not least how long of a period do you have to port your mortgage, did you know they range from 1 day to 120 day’s maximums? In the case of one day that mean the lawyer has to close both sales in that time frame.
Overall its prudent to get professional advice from your Dominion Lending Centres mortgage professional.