Transferring a mortgage from a home you just sold to a new property makes a lot of sense if you like the terms and conditions. And don’t like the idea of being hit with prepayment penalties. But transferring a mortgage is not as easy as it sounds, or in some cases, should be.
If you’re thinking of selling your home and transferring a mortgage, it’s important to know the facts. Below are some of the most frequently asked questions about transferring a mortgage.
Q. What does it mean to “transfer your mortgage”?
A. Transferring, or porting a mortgage, means taking your existing mortgage (along with the current rates and terms) from one property and transferring it to another. You’re only allowed to transfer a mortgage if you’re buying a new property at the same time that you’re selling the current one.
Q. Is transferring a mortgage the same as renewing a mortgage?
A. No. Homeowners that like the terms and conditions of their current mortgage will try and transfer it to their new property. Transferring a mortgage occurs when you’re in the middle of a fixed term, usually five years.
Renewing a mortgage occurs when the mortgage term (the most popular is five years) ends. When the mortgage term ends, you can choose to either stay with the current lender or you can switch providers.
Q. Can I transfer my mortgage to another property?
A. Absolutely. That’s the entire point of transferring a mortgage. Your current mortgage is tied to your home, but when you transfer a mortgage, you and your lender are agreeing to move it from the home you just sold to a new property.
Q. Do all lenders allow you to transfer a mortgage?
A. No. Some lenders will allow you to transfer your mortgage while others will not. If you’re thinking of moving during the term of the mortgage, it’s important to know if your current lender allows you to do this. A mortgage broker will be able to tell you which lenders allow you to transfer a mortgage.
Q. Can I transfer my mortgage to another bank?
A. When you transfer a mortgage you are simply moving it from one property to another. You do this using the same lender because you like the terms and conditions of the mortgage you have with them.
Transferring a mortgage to a different bank would mean you are actually breaking the mortgage during the term of the mortgage and requalifying with a different lender. This would also include paying a penalty for breaking the mortgage early.
Q. Can I transfer a mortgage if I move to a new city?
A. Some lenders will allow you to transfer a mortgage if you move to a new city while others will not. Why do different banks have different rules if you already own a property? Moving to a different city usually means you are taking a new job. If so, there is probably going to be a probationary period; this is an issue for some lenders.
Mortgage lenders like to know you have stable employment and income. Traditional mortgage lenders will sometimes not even consider your income to be stable if you’re on probation.
If you’re relocating to another city with the same employer, you won’t have any issue transferring a mortgage, since you will not be subject to a probationary period. If you sell your home and move to a different city without a job, it is going to be very difficult to transfer a mortgage. That’s because you have no secure income at all.
Q. Can I transfer both variable-rate and fixed-rate mortgages?
A. Not all mortgages can be transferred. Most variable-rate mortgages can’t be ported. Again, your mortgage broker can show you which mortgages can be transferred.
Q. How long does it take to transfer a mortgage?
A. With most lenders, the timeframe to transfer a mortgage is really tight, usually 90 days from the closing of the existing home. Some lenders allow just 30 days for you to complete the sale of the current property and purchase a new home.
Having just 30 or 90 days to find a new home, especially in a competitive market like the Greater Toronto Area or Vancouver, can be a deal breaker for many.
Q. Do I have to requalify when I transfer a mortgage?
A. Technically, you do need to requalify when transferring a mortgage. Even though you are just transferring a mortgage with a lender you already qualified with, your current lender needs to approve the transfer of the mortgage, and they will only do that after looking over information about the home, your credit history, and income.
Q. Can I port a mortgage with bad credit?
A. It’s entirely possible that, for whatever reason, your financial situation has changed since the bank approved you for your mortgage. Maybe your credit history has taken a hit, your income has dropped, or you’ve taken on unexpected debt. If so, it will be extremely difficult for you to transfer a mortgage to a new property.
Canadalend.com, Helping Canadians Secure Home Equity Loans
If you’re selling your home and would like to transfer your existing mortgage, speak to the licensed, independent mortgage experts at Canadalend.com. The mortgage transfer professionals at Canadalend.com can help you find a variable or fixed mortgage that matches or even beats the terms and conditions of your current mortgage.
How can Canadalend.com offer better rates and terms than the country’s big banks and other traditional lenders? The mortgage experts at Canadalend.com are independent, which means they are looking out for what’s best for you. Canada’s big banks will only try and sell you their own financial products, even if it’s not in your best interest.
Because our mortgage professionals are independent, they have access to hundreds of different lenders. Many specialize in providing mortgages to homebuyers with bad credit, no credit, and unreliable income.