Mortgage Portability


A portable mortgage is a mortgage that permits the borrower to transfer their mortgage balance to a new property and with the same lender without penalties. The borrower will transfer the mortgage to the new property with the exact terms that remained at the time of the transfer.


"But They Said It Was Portable..."


The question most often asked: "Is my mortgage portable?"

The answer most often given: "Yes".

This answer is increasingly wrong because the above question is incomplete. To be fair, you would have no way of knowing this. The person answering it should know better than to give you a one-word answer.

The proper question: "Do I need to re-qualify for my current mortgage to move to a new home?"

The proper answer: "Yes, your mortgage is portable, but only if you re-qualify under today's new and more stringent guidelines".

Too many clients learn this lesson the hard way. They sell their existing property before speaking with their mortgage agent, and in some cases they also enter binding purchase agreements under the mistaken assumption they can just port their mortgage.

Do not ask if your mortgage is portable (99% of them are). Ask if you currently qualify to move your mortgage to a new property.

The federal government has created a dynamic in which there are two different qualifying rates for mortgage approvals. And the one used yesterday to get you into a five-year fixed rate mortgage is not always the same one that is used if you want to move that same mortgage to a new home down the street, even just one day later.

One day into your five-year fixed mortgage, you are now subject to the stress test. In a nutshell, the stress test applies the higher qualifying rate and effectively reduces your maximum mortgage approval by ~20%.

Meaning that you may only be able to port 80% of the current balance to another property.

MAIN PAGE

Once you are interested in obtaining a mortgage, then you most likely will also be interested in the help of an experienced real estate agent:

Comments are closed.