You’re thinking of moving your mortgage from your current lender to a new one – however, just because you already have a mortgage in place, it’s not as easy as moving it from one property to the next. Mortgage policies are constantly changing, and when you port a mortgage, a full application must be approved and completely underwritten with full, credit, income, and property reviewed. So before you consider moving it over, it’s important to look at all sides of the scenario and understand the worst case scenario of what you qualify for without porting your mortgage so you avoid any disappointment.
Did you know…
On average, less than 3% of mortgages are portable!
Mortgages can be made simple when you are empowered with relevant information relating to the current market and your life stage. Depending on those factors, you might be happy to get rid of your old mortgage and get in with the new! Let’s take a look at a few items lenders look at when porting a mortgage and how these can affect an application:
1. Dates– most lenders have a different policy on the dates that will allow you to port the mortgage; it can be weeks or months. Your closing date will determine that.
2. Amortization– porting a mortgage means you port the same amortization over, so if you are moving up the property ladder, that may mean your payments are significantly increased, making it less affordable or meaning you can’t qualify with your income.
3. Amounts– some have a 10% variance limit up or down, where the penalty will trigger or it’s no longer a fit within the policy.
4. Change in credit– depending on the credit score and outside debts you have, this will determine if you still fit the credit profile your had when you first put the mortgage in place.
5. Income– if there has been a change in your income type or amount, this will also impact the options available to you.
6. Property type– some lenders only lend on single-family homes, or a particular zoning, or don’t do private sales- even if they did when you originally got your mortgage with them, rules have changed in recent years and lenders have tightened up on particular types of properties they are willing to now mortgage – your current mortgage thus may not be portable to the particular type of property you are thinking of buying.
7. Rate– maybe the change in rates either way of the product type you took doesn’t allow for a port due to one or a few of the combined factors. For example, going from insured to uninsured comes with different policies.
8. Product– The mortgage product you currently have may no longer exist today and can’t be ported over.
9. Inspections – maybe the lender approved the property initially, but after an appraisal inspection, they decide they are no longer going to lend on this type of property or they decide it doesn’t fit the profile.
10. Bridge Financing – if you are buying before you sell, all the above factors come into play. Maybe the original lender doesn’t allow the length of time you need, the cost to bridge is too high, or maybe they don’t approve of that portion of the loan, which puts you back at square one.
Purchasing a home is complex, with many moving parts, and so it is encouraged to speak to a mortgage professional first before you decide to purchase your next home, and then realize you can’t actually port your existing mortgage over to the new property!