It’s not uncommon for life to get in the way of a 5-year mortgage. Imagine that you’ve bought a house and are two to three years in to your term…but suddenly, you or your spouse lands a dream job in a new city.
It’s a no-brainer that you will go, but you can’t help but wonder what the impact will be on your mortgage when you have to find a new place to live. The good news is, with mortgage portability, there is little to no impact. You can simply transfer your mortgage from one home to another, even if your new home is more expensive.
The Pros of Mortgage Portability
Aside from simplifying a pretty major event in your life, portable mortgages make sense for the following reasons:
- Keep Your Same Low Interest Rate. Interest rates are always going up, and the rate you signed up for is often much better than the going rate if you were to start fresh with a new mortgage. Mortgage portability allows you to hold on to your existing rate, continue you in your mortgage term and keep the same amortization period.
- Avoid Prepayment Penalties. There’s a cost associated with breaking a closed mortgage early, and depending on how much time is left on your term, the penalty can be quite high. If you choose to port your existing mortgage, you can avoid these fees altogether.
- Save the New Mortgage Costs. You’ll probably remember from the first time, there are many hidden costs that come along with signing a new mortgage, the least of which is your down payment. Porting your mortgage keeps that money right where you need it – in your pocket.
Is There a Downside to Portable Mortgages?
Yes and no. There is a processing fee when you choose to port your mortgage, and there may also be additional fees to have your new property assessed or to register your mortgage on your new home. But typically, these fees are in the low-thousands, and you’ll still save money by keeping your lower interest rate.
There are also many other factors around portable mortgages that you’ll want to be aware of before you sign the paperwork, and that’s where working with a mortgage broker just makes sense. If you’d like to learn more about your options with mortgage portability, contact Mortgage Guys, and we’ll help you take advantage of the pros while avoiding the pitfalls.