So you want to sell your house and buy a new one!

Are you worried about losing the amazing rate that you got when rates were low? 

Are you concerned about the penalty for breaking your current mortgage?

There may be some good news for you….

Your current mortgage may have an option to “Port”.  This means that your lender would allow you to keep your current mortgage as it is – with the current amount owing, the current rate, the current time left on the term, and the current amortization – and “move it” onto your new property.  You can only port your mortgage if you sell your current property at the same time as you purchase a new one and you are staying with the same lender.

Typically, portability options are offered on fixed-rate mortgages with most major lenders.  When it comes to variable-rate mortgages, you may not have the same option.

If the new house requires a larger mortgage amount than what you currently owe, you may require a “Port and Increase” for your mortgage.  The lenders often use a “blended” system where your current mortgage rate stays the same on the mortgage amount ported over to the new property and the new balance is calculated using the current interest rate.

If the new house requires a lower mortgage amount, you may require a “Port and Decrease”.  In this case, you may pay a penalty on the amount you are decreasing your mortgage.  If you have a “prepayment privilege” with your mortgage, it may reduce the penalty as well. 

The benefits of this option are:

1. You keep your amazing current rate on the current amount of your mortgage
2. You don’t pay a penalty

While porting seems to be the perfect solution to selling and buying a house in the middle of your mortgage term, there are some realistic situations that may prevent approval.

1. Your current mortgage may not have a portability option
2. The house you are purchasing may not be approved by the lender for various reasons
3. Your credit score and/or income details may have changed so that you no longer qualify for the mortgage with your lender.  A full mortgage application process if followed with a port option.
4. You may want to add/remove one of the borrowers from the mortgage.  Some lenders will allow this to be done on a port but some will not.

If you want to be sure about your situation and the possibility to port your mortgage, please contact me and I would be happy to advise you!

If you have questions about how a Purchase Plus Improvements Mortgage could work for you or are considering taking this route for your next home, please do not hesitate to reach out to a Dominion Lending Centres mortgage professional for expert advice!