Mortgage portability is usually an after thought, but it’s a mistake to not consider it before making a decision
Mortgage shoppers are probably 10 times more likely to ask, “What’s your best rate?” than, “What’s your mortgage portability policy?”
One of the first things mortgage shoppers should do is ask themselves: What’s the probability I won’t be in this home in the next X number of years? Of course, no one can foresee things like an illness or death but job uncertainty and plans to expand a family could factor in. Well, if you can’t port and you want to move, you’ll pay a penalty to break that fixed mortgage early. Penalties can vary drastically depending on the lender, rates and other things, but for this purpose, assume it’ll be 4 per cent of your mortgage balance, or $16,000 in this example.
But if you get a fixed rate today, break that mortgage in a few years, and rates are meaningfully lower , those interest rate differential penalties I discussed can be huge. “Opting for a longer window than 30 days can provide a valuable safety cushion,” says Paul Meredith, a mortgage broker at CityCan Financial. Also, if you haven’t sold your current home yet, he recommends setting the closing date for your new purchase at least 90 days out, to allow enough time to complete the sale of your current home.Last but not least, be sure you can qualify. If you request a port, your lender will make you reapply.
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