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.
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Pros and cons of mortgage porting
There are various advantages and disadvantages of transferring your mortgage onto a different property:
Pros
- Favourable interest rates and conditions.
- Lower monthly payments (assuming interest rates have increased).
- No penalty.
Cons
- 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.
How does porting my mortgage impact my situation if I move to a cheaper property?
When you port your mortgage to a less expensive home, some lenders allow you to make prepayments to reduce your mortgage balance. Most lenders permit porting to a cheaper property and won't impose any penalties if your mortgage falls within the prepayment privilege limit.