Porting your mortgage can save you a lot of time and free up some energy to focus on other aspects of your big move. By keeping your existing mortgage, you eliminate the need to shop around and consider various lender options. This makes the entire process more streamlined and quicker too.
How long does it take to port a mortgage? If your lender lets you progress with a mortgage port, moving a mortgage to your new property could take anywhere from 30 days to three months to complete, giving you time to move in to your new property.
Porting can be an easier option too since you don't have to do as much research and compare rates, product deals and new lenders. Also, since your lender already has a lot of your information, you are less likely to have to complete a huge amount of paperwork.
With a fixed rate mortgage, porting should be fairly simple. But with a variable mortgage, things can get more complicated. Your lender will likely advise that you need to switch to a fixed rate before porting can be considered.
Porting a mortgage means you transfer the terms of your mortgage to a new property. That means keeping the same interest rate, fixed-rate period and fees.
What happens if I port my mortgage to a more expensive property? You can use any equity in your current home as a deposit towards your new one. Equity is the difference between what you sell it for and what you owe on your mortgage. Not to mention, of course, any savings you have built up.
“Some lenders allow it, others don't. And not all mortgages are portable.” For example, most variable-rate mortgages (a type of loan where the rate is not fixed) can't be ported at all. Another thing that will affect your eligibility is the amount of your mortgage as it compares to the home you want to buy.
A mortgage provider will want to see at least two or three years of income records and tax returns to estimate your average annual income. It may be more difficult to port a mortgage if your employment status is considered a higher risk, such as being newly self-employed or within a probationary employment period.
A typical remortgage takes around four to eight weeks to complete, however, it can be slightly quicker or take longer than this, depending on the complexity of the case. If you're simply transferring your mortgage to a different deal with the same lender (a product transfer) it is usually much quicker.
Issues such as stricter lender criteria or changes in your personal circumstances may affect your ability to port your mortgage, as could a missed mortgage payment in the past or wanting to mortgage for a value different to the amount you've already taken out.
If the sale and purchase doesn't happen simultaneously, most lenders offer a period of grace, usually up to 30 days. If the delay is longer, most won't allow you to port your current deal. However, if you opt for a deal with the same lender, they may refund the early repayment charge.
For a port decrease (new mortgage amount is lower), your rate would likely be the same, but payments may be lower. You may also be required to pay a penalty if the difference between your existing mortgage and new lower amount exceeds your allowable pre-payment privilege (usually 10-20% annual lump sum is allowed).
In a nutshell
There are 2 ways of adding someone to a mortgage. You can either ask your existing lender if they can add a name to your mortgage. Or you can swap your current mortgage for a new, joint one with a different lender – known as remortgaging.
Chase Home Mortgage Corp., which has four branch offices in California among 44 nationwide, expects to begin the new fixed-rate home loan program next month. The portable mortgage will allow customers to transfer their mortgage to a new home without having to pay either a higher interest rate or more in points.
Porting your mortgage is a process through which your existing mortgage — with its current interest rate and terms — is transferred to a new home. This can help you avoid the shock of current interest rates, which are at their highest point in years.
You have a 60-day grace period after a transfer to a new servicer. That means you can't be charged a late fee if you send your on-time mortgage payment to the old servicer by mistake — and your new servicer can't report that payment as late to a credit bureau.
In most cases, assumption fees are less than the overall cost of a refinance. Oftentimes, an assumption can be completed by paying less than $1,000 in fees, if it can be completed at all. An assumption, if done correctly, accomplishes the goal of separating yourself completely from your existing joint mortgage.
Key things to consider when porting: You need to have completed your new mortgage at least 6 months before applying to port your mortgage. If you don't complete the purchase of your new property on the same day as redeeming this mortgage, you will be asked to pay an ERC.
A family member (or sometimes even non-relatives) can assume an existing mortgage on a home they've inherited. Or if one person is awarded sole ownership of a property in divorce proceedings, that person can assume the full existing mortgage themselves.
Switching lenders before closing, while possible, can cause delays in the overall process and could lead to a change in your closing costs. Changing lenders before closing may also require a new appraisal and credit check. However, it can result in a better deal and increased customer satisfaction.
The short answer is yes, you can transfer your mortgage to another person, but only under certain circumstances. To find out if your mortgage is transferable, assumable or assignable, contact your lender and ask.
The Bottom Line: Taking Equity Out Of Your Home To Buy Another House Comes With Risks, But It's A Solid Option. Can you use home equity to buy a second home or an investment property? The answer is yes – and there are some significant benefits to doing so.
The bank can sell the house at auction for any amount less than the total amount owing of the debt plus fees. A deficiency judgment can arise if the bank sells the house for less than the mortgage debt. The lender then holds you responsible for the unpaid portion of the loan.