Have You Heard Of Porting Your Mortgage?
Are you contemplating selling your home but feeling uncertain about the current state of interest rates because they are so high? Well, there's an intriguing financial strategy in the real estate world known as "Porting Your Mortgage" that might pique your interest. While it's important to note that porting isn't universally applicable to all mortgage types, it's certainly worth considering. In fact, it could potentially save you a substantial sum of money over the course of your mortgage.
But what exactly is mortgage porting? In essence, it involves transferring the existing terms of your mortgage from your current home to your new one. This means you get to retain the same interest rate and terms as before, simply shifting them over to your new property. However, in order for this to work – you must sell your current home and purchase a new one for this process to be viable.
Here's a breakdown of how it works: Begin by reaching out to your current lender to find out whether they offer the option to port your mortgage. If they do, you'll need to redo the application process to ensure you still meet the qualifying criteria of your current mortgage terms. Essentially, it's like going through the same approval process as when you initially purchased your home. You'll be required to provide financial documentation such as bank statements, income records, and tax returns.
One crucial factor to consider is that the purchase price of your new home should be equal to or greater than the outstanding balance on your current mortgage. If you require additional funds to cover the cost of your new home beyond what your existing mortgage covers, your lender may offer you an additional loan, but the terms may not be as favorable. Alternatively, you might need to secure the difference from another source.
While the concept of porting your mortgage may sound appealing, it's important to conduct thorough research to determine whether it's the right financial move for your specific situation. Real estate decisions are significant, and seeking guidance from a qualified real estate professional is often a prudent step to ensure you make an informed choice.