When buying a second home, there are more factors to consider than with your first home. These things include your existing mortgage type, interest rate, and mortgage provider. Thus, the question often arises: What should you do with your mortgage? One of the options is to keep your current interest and conditions and transfer it to your other property. Egle Kemezyte from Mister Mortgage explains how to port your current mortgage to another property.
The process of moving or transferring your mortgage from one property to another is known as porting. Moving your current mortgage to a new property can be cost-effective since you don’t need to pay exit fees or early repayment charges. With increased mortgage interest rates of 2% or 2,5% in the last year, porting your low-interest rate can save you money.
How does mortgage porting work?
Porting a mortgage involves transferring the terms of your current mortgage to a new property. This includes maintaining the same interest rate, fixed-rate period, and fees. However, some lenders may allow for modification of the mortgage terms, such as extending the duration or changing it from a joint mortgage to an individual one. While many lenders advertise the option of mortgage porting, it’s important to note that it’s not a guarantee. The lender has the right to reject a request to port the mortgage loan.
Pros and cons of mortgage porting
There are various advantages and disadvantages of transferring your mortgage onto a different property:
Favourable interest rates and conditions.
Lower monthly payments (assuming interest rates have increased).
There is not a lot of time to complete the process.
You need to be lucky to find a new property in time.
You might miss out on better rates and conditions.
Can I port my mortgage?
A few factors can influence the lender’s decision to allow you to port your mortgage. You can generally port a mortgage depending on:
Whether your mortgage lender allows you to port your mortgage: If your current home was eligible for an NHG mortgage and the new home is not eligible for a mortgage with NHG. Sometimes, lenders do not permit changing the mortgage type, duration, or other conditions. Any discounts on the rate related to the current home cannot always be transferred.
Your financial circumstances: You should be eligible for the new financing.
What if your current mortgage is not enough to cover a new mortgage?
If you buy a home that requires a larger mortgage than you currently have, your lender may allow you to blend and extend a ported mortgage. There is no penalty to pay because you are not breaking your initial mortgage.