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Mortgage Broker Vancouver James Park - Mortgage Portability
Creative Office

Mortgage Portability

Porting your mortgage may help you save

Understanding Mortgage Portability

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Mortgage portability is a feature offered by many lenders and mortgage products that allows borrowers to transfer their existing mortgage, including the interest rate and terms, to a new property. This feature can be advantageous when you plan to move during your mortgage term, as it enables you to avoid breaking your mortgage contract and potentially paying a penalty.

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Here's how mortgage portability works and some key considerations:

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Benefits of Mortgage Portability:

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  1. Keep Your Rate and Terms: When you port your mortgage, you retain your existing interest rate and product terms. This can be especially beneficial if you have a low, favorable interest rate.

  2. Maintain Monthly Payments: Your monthly mortgage payments will remain the same when you port your mortgage. This stability can help you budget effectively.

  3. Avoid Penalty Fees: Porting your mortgage typically incurs a small port fee, but you won't have to pay the penalty for breaking your mortgage term, which can be substantial.

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Types of Mortgage Portability:

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  • Straight Port: When the new mortgage amount is similar to the existing one, you can port your mortgage without significant changes.

  • Port Decrease: If the new mortgage amount is lower than the existing one, your interest rate may stay the same, but your payments could be lower. Be aware of potential penalties if the difference exceeds your allowable pre-payment privilege.

  • Port Increase: When the new mortgage amount is higher, lenders may offer a blended rate, which combines your existing rate with the current market rate for the additional amount. This allows you to borrow the extra funds and add them to your mortgage.

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Blended Rate Calculation: Lenders calculate a blended rate based on factors such as your existing rate, remaining term, new mortgage details, and your chosen term length. This rate is usually higher than your existing rate but lower than the rate for a new mortgage without portability.

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Factors That Can Affect Mortgage Portability:

  1. Insurance Type: If you switch from an insured to an uninsured mortgage (commonly associated with homes over $1 million), porting may not be an option. However, some lenders, like THINK Financial, offer more flexibility in certain cases.

  2. Variable Rate Mortgages: Porting a variable rate mortgage can be more challenging, especially when increasing the mortgage amount. Variable rates are tied to prime bank rates, and not all lenders permit portability for these products.

  3. Regulatory Changes: Government regulations can affect portability rules during your mortgage term. Stay in touch with your broker or lender to stay informed about any changes.

  4. Qualification Changes: You'll need to re-qualify for your mortgage when porting. If your credit, income, or debt levels have changed negatively, you may not be approved for the new mortgage.

  5. Property Type or Location: Some lenders may restrict portability based on the property type or location. Ensure your lender operates in the area where you plan to move.

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Portability Costs: While portability is a convenient option, some lenders may charge a slightly higher rate for mortgages with this feature. However, the cost savings and flexibility it offers can outweigh the slightly higher rate.

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Before committing to a mortgage product with portability, it's essential to understand the specific terms and conditions of the feature, including any potential fees and limitations. I'll help you make informed decisions about your mortgage options and save thousands over the life of your loan.

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5589 Byrne Rd #227, Burnaby, BC V5J 3J1

We're dedicated to securing the most favorable mortgage rate for you. Your eligibility for a competitive rate is influenced by specific factors, including your credit score and home equity, in accordance with Canadian regulations. Discover your personalized rate swiftly, and rest assured. Lic. 503774

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