Dominion Mortgage Pros

Moving can be one of the most exciting chapters in life, especially if you’re upgrading to a bigger home or a new neighborhood in beautiful Edmonton. But what happens to your mortgage when you move? This is where mortgage portability comes into play. At Dominion Mortgage Pros, we want to ensure you understand how to keep your favorable mortgage rate, even when changing addresses.

What is Mortgage Portability?

Simply put, mortgage portability allows you to transfer your existing mortgage from your current home to a new one. This means you can take your current interest rate, loan balance, and terms with you if you decide to find a new place—provided that the new property meets your lender’s requirements.

Why is Mortgage Portability Important?

• Avoiding Increased Rates: If you got your mortgage during a low-interest period, moving without portability might mean accepting a higher rate in today’s market, which can affect your monthly payments significantly.
• Smoother Transaction: Mortgage portability can streamline the process of buying a new home while selling your current one, making the transition a bit less stressful.
• Flexibility: Sometimes, people are hesitant to move because they fear their new mortgage will be less favorable. Portability allows for greater flexibility and peace of mind.

How Does It Work?

When you consider moving and want to make use of mortgage portability, here’s a step-by-step look at how it typically works:

1. Check Your Current Mortgage Agreement: Not all mortgages come with portability clauses. Make sure to review your terms or consult with your mortgage broker.
2. Contact Your Lender: Talk to your lender about portability. Some lenders might require they assess the new property before allowing you to transfer.
3. Evaluate Your New Home: The new property’s value must be sufficient (and sometimes more) than your existing home to qualify for the portability.
4. Undergo Approval: Even through portability, you would need to go through a mortgage approval process for the new property, including possible new underwriting.
5. Closing the Deal: Once everything is in agreement, you can proceed with closing on your new home.

Portability and Refinancing

Many homeowners wonder if they can refinance during the portability process. The answer is often yes. You may want to add to your existing mortgage, which could allow you to adjust your monthly payments according to your financial situation.

Bear in mind that refinancing could entail new terms and conditions, so it’s vital to understand any possible impact on your current rate and monthly payments.

What Are the Benefits?

• Keep Your Rate: If your mortgage was locked in at a lower rate, portability allows you to maintain that favorable interest rate.
• Consolidate Financing: If you want to borrow more than your original mortgage, combining your old and new mortgages can simplify your finances.
• Simplicity in Transitions: Since you’re already familiar with certain terms of your existing loan, portability can save time explaining your needs and preferences to a new lender.

What to Note When Considering Portability

While portability is beneficial, it’s essential to keep the following points in mind:

• Approval Process: You may still have to qualify financially for the new mortgage, based on your creditworthiness and overall financial situation. This step is crucial, especially if your circumstances may have changed since your last approval.
• Potential Fees: While you may avoid some costs, check if there are fees associated with transferring or maintaining your existing mortgage. This could include appraisal fees and legal fees.
• Existing vs. New Property: Your new home’s value and condition may affect underwriting. The lender will assess if the new property meets their requirements and appraisal standards.

Key Statistics to Keep In Mind

As of 2023, the Bank of Canada states that over 50% of homeowners in Canada consider portability an essential feature to keep their mortgage rates low when moving. Moreover, with a rapidly evolving real estate market, understanding your options has never been more crucial.

Conclusion

Understanding mortgage portability is important for anyone thinking of moving, upgrading, or simply changing locations within Edmonton. By transferring your existing mortgage, you can bypass potential increases in interest rates and lessen the stress that often accompanies buying a new home.

At Dominion Mortgage Pros, we’re here to simplify the complexities. If you’re considering moving, let’s discuss your mortgage options. The right advice ensures you can enjoy the perks of your current mortgage while settling into your new dream home comfortably.