Porting or Transferring Your Mortgage

Part I


Imagine you bought your dream home two or three years ago. But one day you happen to find a new place and decide to sell your current home. If you sell and you’re in the middle of a five-year term, you probably think you’ll have to break your mortgage. But you may also be able to port the mortgage.


What this means is taking your existing mortgage—including the current rate and terms—from one property and transferring it to another. You’re only allowed to port your mortgage if you’re purchasing a new property at the same time you’re selling your old one.


It’s normal that your mortgage you’ll need for the new property might be larger, which isn’t an issue. Your lender will offer you what’s called a blend and extend. This is essentially a weighted average of the existing mortgage and interest rate and the new money required at a current mortgage rate.


Let’s assume you have a $250,000 balance remaining on your mortgage, you have a fixed rate of 2.1%, and you’re two years into a five-year term. You can break your mortgage and pay a fee or you can borrow the additional amount from your lender. If the best mortgage rate you qualify for is 2.69%, the blended rate will be somewhere between 2.1% and 2.69%.

For example, if you need to borrow an additional $75,000 and you want a new five-year term, your blended rate will be 2.42% on a $325,000 mortgage.

To port or not to port?


to be continued next week….

For more information on porting your mortgage contact Noble Mortgages @ 416-241-2227