What is Mortgage Porting?

2016-05-12 | 14:09:26

Porting is a term used by mortgage professionals to transfer a mortgage from one property to another, while eliminating penalties associated with breaking a mortgage agreement. There are many reasons why a homeowner may want to transfer a mortgage. Perhaps you are having a larger family than expected, you got a promotion at work, or the home of your dreams has just become available. Whatever the reason, here we lay out some key information regarding porting that you should know.

 

PORTING TERMINOLOGY
Port and Increase: Add additional funds to an existing mortgage needed to purchase a new home
Port and Decrease: Reduce the amount of an existing mortgage when purchasing a new home
Blend and Extend: Take the current mortgage rate and blend it with the current rate offered by your lender to meet somewhere in the middle to recoup the penalty of breaking a mortgage agreement.

 

DIFFERENT LENDER GUIDELINES
Each lender will have a personal set of guidelines when it comes to porting. Here are some common things you should ask about when looking into porting as an option:
• What is the time limit they have on porting?
• Do they port by having two parts, with two maturity and payment dates?
• If the old home sell before possession on the new home begins, will there be a penalty?

 

WHAT YOUR LENDER WANTS YOU TO KNOW
• Try to give your lender a heads-up that porting may be in your future. The more time you give them to prepare, the easier the process will be for both of you.
• It may be better for you to incur the penalty of breaking a mortgage agreement in the long term. Be open to all the options and allow your mortgage professional to talk you through all the probable scenarios.
• It is important to disclose if you have a high ratio mortgage, in which you put down less than 20% of the purchase price. This is important because you then have mortgage insurance to consider as well. It is possible to port your mortgage insurance premium as well, but again the process is much simpler if you disclose this up front.

 

Well there you have it, a lot of information thrown at you on porting. Hopefully you understand the gist of this great option, but if anything is still unclear then don’t hesitate to ask you mortgage professional more questions! If you think that porting is something that lies in your future, then it is never too early to start preparing. We here at AC Lending Group are happy to help you through any part of understanding or instigating the porting process, so give us a call!