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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.

To see what kind of mortgage you qualify for, contact Canadalend.com today or apply online and a Canadalend.com mortgage specialist will set up an appointment at your earliest convenience.

What Is a Cash Back Mortgage?

Purchasing a home is a major expense. After saving up for a down payment you may realize that there isn’t enough money left over to help with closing costs, pay for renovations, furniture, landscaping etc. That’s where a cash back mortgage comes in. Many lenders offer a cash back rebate when you take out a mortgage.

With a cash back mortgage, a lender gives you a lump sum cash payment when the mortgage closes. How much depends on which lender you use. With traditional lenders, the most popular amount is five percent of your mortgage. Depending on which lender you use though, you can get anywhere from one percent to seven percent cash back on your mortgage.

Since the cash back is given once the mortgage closes, it cannot be used for the down payment. The cash back mortgage is tax-free and can be used for virtually anything you like: closing costs, renovations, furniture, or paying down other high-interest debts like credit cards.

How Does a Mortgage Cash Back Work?

How does a mortgage with cash back in Canada work? Let’s say you purchase a home for $350,000 and have a 20% down payment of $70,000. You choose a five-year mortgage with a rate of 3.79% that offers one percent cash back.

With the down payment, you’ll end up borrowing $280,000 from the bank ($350,000 – $70,000). Of that, you get a one percent cash rebate of $2,800 ($280,000 x 1.00%). If instead you opted for a five percent cash back mortgage, the lender would give you $14,000 up front.

Nothing is free when it comes to banks. A cash back rebate is always attached to a fixed mortgage and the rate is going to be a little higher than the interest rate attached to a standard, non-cash back, mortgage. In the example above, the standard mortgage rate would probably be around 3.25%.

That little extra bit of interest can add up.

Using the first example, if you selected a five-year fixed mortgage rate of 3.75%, you would end up paying the lender an extra $4,378 over the five-year term. That’s after you deduct the cash rebate you received when you closed the mortgage. Not everyone is willing to pay $4,378 for an upfront mortgage rebate of $2,800.

Eligibility for Cashback Mortgage

Not everyone qualifies for a cash back mortgage. Most traditional lenders, (Canada’s big banks) only offer them to those who have high credit scores, a low debt-to-income ratio, and full-time job (steady income). You also have to be living in the residence you’re buying; meaning, no renters can be on the property in question.

If your credit score is bruised or you’re new to Canada and don’t even have a credit score, or are self-employed, your odds of qualifying for a cash back mortgage is very remote.

Is a Cash Back Mortgage Right for You?

Like most financial products, there are benefits and drawback of a mortgage with cash back. On the plus side, the cash back you get when you close your mortgage is tax-free and can be used for whatever you like.

A cash back mortgage can be a good idea for those who need the money right away and don’t mind paying the slightly higher interest rate over the term of the mortgage. Thanks to a strong real estate market, the amount you paid in higher interest is offset by rising housing prices.

At the same time, you will be hit with penalties if you refinance, renew, or transfer your mortgage. That’s because cash back mortgages are only available with fixed term mortgages with a minimum term threshold.

If you refinance or break your mortgage early, you will probably be on the hook for a percentage of the cash back rebate (pro-rates based on the number of months left in the term). Some lenders will require you to pay back the entire amount in full.

This is an important consideration. Because the average Canadian moves, on average, every three years, a large number of homebuyers renew or refinance their mortgage. Depending on the lender, you could end up owing the usual three months interest on the balance (for breaking the mortgage) and the balance on the cash back mortgage.

FAQs about Cash Back Mortgages

1. Is mortgage cashback taxable?

The money you receive from a cash back mortgage is tax-free.

2. When is mortgage cashback paid?

Technically, the money you receive upfront with a cash back mortgage is paid back by the slightly higher interest rate you agreed to when you secured your mortgage. But because of the higher rate, you’ll pay more interest over the life of the mortgage term than the cash back you received.

3. What is the interest rate for cash back mortgage?

Cash back mortgages are always attached to a fixed-interest rate mortgage. And the rate that comes with a cash back mortgage is always a little higher than a standard mortgage.

4. Does credit score matters for cash back mortgage?

Credit scores are indeed important when it comes to securing a cash back mortgage. A good credit score means you have a long history of paying your bills on time. In addition to having excellent credit, you need to have a good credit profile and a steady, provable, income stream.

Canadalend.com, Helping Canadians Secure Home Equity Loans

If you don’t mind the higher interest rate, a cash back mortgage can be a great option for homebuyers who need a little extra money in the early stages of home ownership. To see if a cash back mortgage is right for you, speak with a licensed mortgage professional at Canadalend.com.

The mortgage experts at Canadalend.com are independent, that means they are looking out for what’s best for you. Traditional lenders, like Canada’s big banks, only want to sell you their own financial products, even if it’s not in your best interest.

The independent mortgage professionals at Canadalend.com have access to hundreds of different lends. Many specialize in providing mortgages and cash back mortgages to homebuyers with bad credit, no credit, and unreliable income.

To see what kind of cash back mortgage you qualify for, contact Canadalend.com today or apply online and a Canadalend.com mortgage specialist will set up an appointment at your earliest convenience.

While the housing market has fluctuated in the past year, the condo market seems to grow steadily stronger. Real estate across the city is valuable, but mostly condominium owners have reaped the largest benefits. As demand increases, so does the supply. So how can people still charge so much for what is often so little space?

Relative affordability

When it comes down to it, condo units are often still more affordable options than homes and theoretically require less upkeep than homes. Many people appreciate not having to make their own decisions or worry independently when it comes to replacing or repairing certain aspects, such as a roof or windows. Condo unit owners are also not responsible for regular, simple maintenance such as mowing a lawn or shoveling snow.

Easier maintenance

Maintenance fees are a monthly payment required in a condo, but they vary from building to building and tend to rise only gradually. Further, they are meant to cover the cost of such repairs and replacements that tend to naturally occur in a home over time. Rather than it being the sole responsibility of the owner of a house, however, in this case, it is a shared responsibility of all condominium unit owners.

Security and community

There is arguably an increased sense of security living in a condo compared to a home, with cameras and possibly concierge in place to monitor any suspicious activity. This fosters an added familiarity and trust among residents who live in the building.

Units also closely neighbour other units to incite a sense of community, with residents sharing a variety of possible built-in amenities, such as an exercise room, swimming pool, games room, and theatre space. It is also helpful to have commercial businesses typically within walking distance or even right below a condominium.

Amenities vs. Square Footage

While houses offer greater autonomy, there is no question that condominiums offer a greater ease to homeownership. While incurring fewer responsibilities to maintain one’s property, residents can also take advantage of more security and social opportunities. Even though square footage may be an issue, having common use spaces arguably extends one’s feeling of home.

Canadian Mortgage Interest Rate Fundamentals

For most Canadians, the biggest financial transaction they will undertake is buying a home. Very few Canadians can afford to purchase their home outright, meaning, most have to qualify for a mortgage. Unfortunately, few Canadians fully understand how mortgages work and are priced. Most know they want a low interest rate, but don’t appreciate what kind of impact a seemingly small 0.25% mortgage interest rate hike will have on the total cost of their mortgage or how it will impact their day-to-day living.

A quarter point rate hike might not seem like a lot, but it adds up. If you have a $200,000 mortgage and an interest rate of 2.8%, you would pay around $926 monthly. With a mortgage rate of 3.6%, that same mortgage will now cost $1,009 per month.

Fixed-Rate or Variable-Rate Mortgages?

One big factor that dictates mortgage interest rates is whether you have a fixed-rate or variable-rate mortgage. The majority of Canadian homeowners have a fixed-rate mortgage; with this, you make the same interest rate mortgage payments each month.

Homeowners like fixed-rate mortgages because they like knowing how much they pay each month and the security of knowing they are protected if interest rates rise.

Nothing is fool proof though, fixed-rate mortgages often come with harsher penalty fees should you break the mortgage.

Homebuyers who want more flexibility and aren’t worried about rising interest rates prefer variable rate mortgages, which fluctuate with the market. Like a fixed-rate mortgage, you make the same monthly payments, but the amount that goes to the principal will fluctuate.

How Is Mortgage Interest Calculated in Canada?

How mortgage interest is calculated in Canada is not a simple question to answer. That’s because it involves a complicated equation and compounding interest. That’s where an easy-to-use mortgage calculator comes in handy.

For starters, it’s important to ask your lender what the effective rate on your mortgage is, because it is often higher than the posted rate.

If your mortgage interest rate is compounded semi-annually, that means the interest is compounded twice a year instead of just once. For example, if you are quoted a mortgage at 6%, because the equation used to determine interest rates compounds, it could really be 6.9%.

There are even some mortgages that are compounded monthly and even daily. The more often a mortgage is compounded, the higher your monthly interest rate will be. That’s why it’s important to understand the difference between the posted rates and effective rates before you get a mortgage.

For those who do want to try figuring it out on your own, you will need your payment amount and the PV facto—that is, the number of months in your mortgage term, or, the total number of payments.

To figure out your interest rate:

• Principal = (PV Factor) x (Payment)
• Payment = (Principal) / (PV Factor)

Dividing the principal by the total number of payments will give you the total payment amount.

Determining how mortgage interest rate is calculated in Canada is not easy, which is why it’s easier to use a mortgage loan calculator to find out what the exact interest rates and payments will be.

FAQ’s about How Mortgage Interest Rate Is Calculated

How often is interest compounded on a mortgage in Canada?

It depends on what kind of mortgage you get and the lender you go to. Fixed-rate mortgages in Canada are compounded, by law, semi-annually. Twice a year, unpaid mortgage interest is tacked on to the principal of the loan.

Do mortgage payment go down over time?

No. Whether you secure a fixed-rate mortgage or variable-rate mortgage, the payment stays the same. The amount going toward the principal changes though. Paying off the principal as quickly as possible will reduce the amount you pay in interest.

My credit score is low. Will that affect my mortgage interest rate?

Yes. The lower your credit score the higher the interest rate on your mortgage. The reverse is also true; the higher the credit score, the lower the interest rate on your mortgage will be.

Traditional lenders punish people with lower credit scores by offering them mortgages with higher interest rates. They believe those with a low credit score are more likely to miss a mortgage payment or even default on their loan.

What is a minimum credit score for mortgage Canada?

In Canada, credit scores range from 300 to 900. Because credit scores show how likely you are to pay your bills on time, the lower the score, the better the odds are you could default. To get the best rates, some lenders insist on a minimum score of 680. Alternative lenders on the other hand are not as concerned about credit score and provide mortgages to those with credit scores of 620 or lower.

Can I get lower interest mortgage if my credit score improves?

Absolutely. Banks save their best mortgage interest rates for those with the best credit scores. You can improve your bruised credit by paying your bills on time. It also helps to use your credit more, that’s because your credit score is based on your ability to manage your finances. Just make sure to keep balances on credit cards and other revolving credit at a minimum. All of this will help improve your credit score, which, in turn, can help your get a mortgage with the best interest rates and terms.

Canadalend.com, Helping Canadians Secure Home Equity Loans

If you’re looking at securing a mortgage with the best interest rates and terms, it’s imperative that you understand how interest rates are calculated and apply to your mortgage. The licensed mortgage professionals at Canadalend.com can help with that.

Why choose Canadalend.com over the big banks or other private lenders? The mortgage experts at Canadalend.com are independent. That means they are looking out for your best interest. Canada’s big banks will only push their own products on you, even if it’s not in your best interest.

Because the mortgage professionals at Canadalend.com are independent, they have access to hundreds of different lenders. Many specialize in providing mortgages to homebuyers with bad or no credit, unreliable income, or have declared bankruptcy.

To see what kind of mortgage you qualify for, contact Canadalend.com today or apply online and a Canadalend.com mortgage specialist will set up an appointment at your earliest convenience.