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Can You Take Your Mortgage to Your New Mississauga Home?
We can transfer your existing mortgage from your current financial institution to another one with better terms and conditions.
One of the most important questions you should ask before you sign a mortgage agreement is whether or not you can port your mortgage. A portable mortgage agreement is one that allows you to take your mortgage with its current interest rate and terms with you to a new home.
The reason that homeowners prefer to port their mortgage is to preserve the interest rates that they have negotiated. It also ensures that they avoid penalties. If you are unable to port your mortgage, the only way to avoid penalties is to time the sale of your house with the end of the term of the mortgage. This is not easy.
You cannot add the portability feature after the mortgage has been signed. Typically, a variable rate mortgage is not portable. The lender will usually make mortgage holders fix their interest rates before they will add the portability feature. You may have to pay a fee to include portability but it may be worth your while as it is likely to cost less than penalty payments.
Private lenders also offer portability options so if you are thinking of selling your Mississauga property during the term of the mortgage it is worth enquiring about the option.
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Your Portable Mortgage and Upgrading Your Home
Having a portable mortgage does not mean that you will automatically qualify for a larger mortgage when you want to move. All the criteria that applied when you secured your first mortgage will apply to this one.
Your new property will be appraised and your income and debt to income ratios will all be assessed before a new mortgage amount will be agreed. If you don’t qualify for the full amount you will have to come up with the cash yourself. If the lender is not happy with the new property he can refuse to port.
You should ensure that your credit rating and debt to income ratios are all in order before approaching your lender. He cannot reduce the current mortgage neither can he raise the interest rates but he can refuse to increase the amount that he lends you.
Since it is likely that your new home will cost more than your current home, you will probably need a bigger mortgage. Some Mississauga lenders will agree to a blend and extend agreement, whereby they will add a new amount onto the current mortgage at new interest rates and extend the remainder of the term to another five-year fixed term. It is essentially a weighted average of the old and new rates.
Many lenders will place restrictions on the time that you have to sell your home. The time span typically varies between thirty days and one hundred and twenty days.
To Port or Not to Port
Whether you should port or not will depend on the current interest rates versus the interest rates that you are paying on your mortgage. If you are paying interest rates that are higher than the current available rates, it might be worth your while to pay the penalties and get a new mortgage.
Mississauga Mortgage Broker can offer you advice on the best available deals and can help you with simulations so that you can make an informed choice when moving home.
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