How to Port a Mortgage?

Thinking of moving to a new home but want to take your mortgage with you? Porting your mortgage can be a practical and exciting way to do it, smoothly transferring your loan to the new place. This blog will walk you through the important steps in a simple way—checking if you can do it, talking to your lender, handling legal stuff, and making sure your move to your next sweet home is easy.

Let’s jump into the world of mortgage porting and make your move a breeze!

Best Banks for Transferring a Mortgage in Canada

Transferring a mortgage in Canada, also known as mortgage porting, varies among banks. Here are some major ones:

1. Scotiabank: Offers mortgage transfer with portability options.
2. TD Canada Trust: Provides a portable mortgage for penalty-free transfers.
3. Royal Bank of Canada (RBC): Allows mortgage portability, with terms to discuss with an RBC specialist.
4. CIBC: Offers mortgage portability; consult with a CIBC advisor for terms.
5. BMO (Bank of Montreal): Allows mortgage transfer with specific terms.
6. National Bank of Canada: Offers mortgage transfer with portability features.
7. HSBC Bank Canada: Provides mortgage transfer services with portability options.

Eligibility Criteria for Mortgage Transfer

When contemplating a mortgage transfer, the initial step involves a conversation with your lender to evaluate your eligibility. Examine your current mortgage contract for porting options, as the absence of this provision may complicate renegotiations.

Factors Affecting Eligibility

• Interest Rate Considerations:

1. Porting is typically feasible with a fixed interest rate.
2. Variable rate holders may need to renegotiate before qualifying for portability.
3. Lenders might conduct a background check before approving porting.

Financial Examination:

• Your income, employment status, debt situation, credit score, and overall financial health will be assessed for creditworthiness in the porting process.

Preparing Your Financial Situation

• Before approaching your lender, ensure your financial situation is in order. Address any significant debts, and verify that tax and income files are up to date.

Potential Reasons for Mortgage Porting Denial

Even if you meet the requirements, your lender may deny your request for various reasons, such as:

• Inability to demonstrate current income, especially for self-employed individuals without proper tax return documentation.
• Decrease in salary since the initial mortgage application.
• Increased monthly debt-to-income ratios beyond acceptable limits.
• A drop in credit score below the lender’s permissible level.
• Changes in qualification requirements, making you ineligible based on new guidelines.
• Non-compliance with eligibility requirements for the new property, like being outside the lending area.
• Inability to transfer a Home Equity Line of Credit (HELOC) as per lender policies.

Questions To Ask Before Transferring.

Thinking about moving your mortgage? Here are some simple questions to ask:

• Can I Transfer My Mortgage?
• Check if your current mortgage allows transfers and if there are any penalties.
• What Costs Are Involved?
• Ask about fees for transferring, like discharge or legal fees.
• Can I Move to a New Place Easily?
• If changing homes, check if your mortgage can move with you without extra charges.
• How Much Interest Will I Pay?
• Understand the interest rates for the transferred mortgage, especially if they’ve changed.
• Will My Mortgage Terms Change?
• Check if the transfer comes with new terms, like different payment schedules.
• What’s the Transfer Process Like?
• Get details on how to transfer, what documents are needed, and how long it takes.
• Do I Qualify to Transfer?
• Ask about criteria like credit score or income stability for a smooth transfer.
• Can I Lock in My Interest Rate?
• See if you can keep the current interest rate to avoid surprises.
• Does the New Home Affect the Transfer?
• If moving, check if there are rules for the new property.
• What if They Say No?
• Understand why a transfer might be denied and what it means to you.

Note: Remember, each lender has different rules, so talk directly to them to get all the info you require before moving your mortgage.

Alternatives to transferring a Mortgage.

Here are some best alternatives to explore as mentioned below:

1. Refinancing: Consider getting a new mortgage with different terms through refinancing. This can help secure a lower interest rate or change your loan structure, offering potential cost savings.
2. Renegotiating with Current Lender: Explore the possibility of modifying your existing mortgage terms with your current lender. They may provide solutions like adjusting interest rates or changing the repayment schedule to better suit your needs.
3. Home Equity Line of Credit (HELOC): Open a HELOC to borrow against your home’s equity. This provides flexibility in accessing funds without the need to transfer your entire mortgage, offering a financial cushion when required.
4. Bridge Financing: If you’re buying a new home before selling your current one, consider bridge financing. It provides short-term funding to cover the gap between purchasing and selling, ensuring a smoother transition.
5. Paying Down the Mortgage: Focus on paying down your current mortgage instead of transferring. This approach improves your financial position over time and provides more options for the future, including potential refinancing opportunities.

PROS & CONS of Transferring a Mortgage.

When contemplating a mortgage transfer, weigh these advantages and disadvantages to make a more informed decision:

Pros of Mortgage Transfer:

1. Interest Rate Advantage: Secure a lower interest rate through mortgage transfer, leading to reduced monthly payments and potential long-term savings.
2. Property Portability: Transfer your mortgage to a new property without penalties if your current mortgage offers portability features. This flexibility is beneficial when moving or upgrading your home.
3. Avoiding Penalties: If allowed by your lender, mortgage transfers can help you sidestep prepayment penalties associated with breaking your existing mortgage contract during moves or refinancing.

Cons of Mortgage Transfer:

1. Transfer Costs: Mortgage transfer may involve fees like discharge fees, legal fees, or penalties, diminishing the financial benefits of the transfer.
2. Limited Options for Variable Rates: Transferring with a variable interest rate may not be straightforward, requiring negotiation with your lender and potentially leading to less favorable terms.
3. Eligibility Challenges: Not everyone qualifies for a mortgage transfer. Changes in income, employment status, or credit score may impact eligibility, posing challenges for some individuals in the process.

Are you considering A Mortgage Transfer?

When standing at the intersection of mortgage decisions, pondering a transfer, keep in mind it goes beyond paperwork and interest rates—it’s an opportunity for financial optimization. A mortgage transfer might hold the key to improved terms, reduced payments, or an expedited journey to debt freedom. Evaluate your current situation, consider the pros and cons, and if everything falls into place, take that leap of transfer without hesitation. Your financial future could very well express its gratitude.

Best wishes on your home financing journey!

Frequently asked questions (FAQ)

Let’s focus on the core five FAQs:

Q1: What is mortgage porting?

A1: Mortgage porting allows you to transfer your existing mortgage to a new property, essentially taking it with you when you move.

Q2: Why consider porting a mortgage?

A2: Porting is advantageous if you wish to avoid penalties for breaking your current mortgage, enabling you to maintain your current interest rate, terms, and conditions.

Q3: Can I port any mortgage?

A3: Not all mortgages are portable. Check your mortgage agreement or consult with your lender to confirm if porting is an available option.