Can Porting Get You a Lower Interest Rate?

Congratulations! You’ve found your dream home and are ready to make the move. But between packing boxes and coordinating movers, a big financial decision looms: your mortgage. In today’s market, where interest rates can fluctuate, you might be wondering if you can snag a better deal by porting your existing mortgage to your new place.

Porting your mortgage in 2024 would lock in your past rate, good if it’s low but not for snagging a new low. Consider refinancing instead if current rates are enticing and you can stomach early repayment fees. Let’s dive into the nitty-gritty of mortgage porting and see if it can help you save some serious cash.

Can Porting Your Mortgage Get You a Lower Interest Rate?

Imagine this: you scored a fantastic 3.5% interest rate on your current mortgage a few years ago. Now, rates have climbed to an average of 6% for similar loans. Porting allows you to transfer your existing loan balance and that fantastic 3.5% rate to your new home. It’s like taking your old mortgage with you, but to a brand new address!

This can be a huge advantage if current rates are higher than yours. You get to keep the sweet rate you already have, potentially saving you thousands of dollars over the life of your loan. For example, let’s say your original mortgage balance is $200,000.

Over a 30-year term, the difference between a 3.5% and a 6% interest rate could amount to a staggering $120,000 in total interest paid! That’s a significant chunk of change you could keep in your pocket by porting your mortgage.

But Here’s the Catch:

Mortgage porting isn’t a magic bullet. There are a few things to consider before you jump in:

• Not all lenders offer porting: It’s not a universally available perk, so be sure to check with your current lender upfront to see if they have a mortgage porting program. Different lenders have different policies, and some may not allow porting at all. Even if your lender does offer porting, there may be specific requirements you need to meet to qualify.
• Eligibility matters: Your lender will carefully assess your financial situation to ensure you can still afford the mortgage on the new property. This evaluation will likely consider your income, credit score, employment history, and the value of the new home compared to your existing loan balance. If there have been any significant changes in your financial circumstances since you obtained your original mortgage, it could impact your eligibility for porting.
• Timing is crucial: Most lenders have a specific window of time, typically between 30 and 90 days, for porting to be an option. This window applies to the timeframe between selling your old home and closing on the new one. Acting swiftly and ensuring your timeline aligns with your lender’s requirements is essential for a smooth porting process.
• Additional funds might require a separate loan: If you’re moving to a more expensive home than your current one, you’ll likely need a separate loan for the difference between your existing mortgage balance and the purchase price of the new home. This new loan will probably have a different, and potentially higher, interest rate than your ported mortgage. Be sure to factor in the potential interest rate on this additional loan when calculating your overall borrowing costs.

So, Should You Port Your Mortgage in 2024?

When you move, you don’t necessarily have to leave your mortgage behind. Porting your mortgage allows you to transfer your existing loan agreement, including the interest rate, to your new home. But is it the right decision for you?

The decision depends on your specific situation. Here’s a breakdown to help you decide:

Porting shines when:

• Interest Rates Have Climbed: If you secured a fantastic interest rate on your current mortgage and market rates have gone up since, porting allows you to keep that advantageous rate. This can translate to significant savings over the long term.
• Moving in the Same Price Range: Porting often comes with restrictions on the value of the new home you’re purchasing. Staying within a similar price range ensures you can seamlessly transfer your existing loan to the new property.
• Timely Move: Most lenders have a specific window during which you can port your mortgage. Make sure the closing date for your new home falls within this timeframe to avoid any complications.

Consider refinancing if:

• Mediocre Interest Rate: If your current interest rate is just average and you see significantly lower rates being offered by other lenders, refinancing your mortgage might be a better option. This could lead to substantial long-term savings, especially if you plan to stay in the new home for a while.
• Early Repayment Charges Aren’t a Hurdle: Some mortgages come with penalties for paying them off early. If you’re comfortable absorbing these fees, refinancing with a new lender might offer a much lower rate, potentially outweighing the early repayment charges.

The Bottom Line

Porting your mortgage can be a smart strategy to save money, but it’s not a one-size-fits-all solution. Talk to a qualified mortgage professional to explore your options and determine if porting is the right move for you. By carefully considering the pros and cons, you can make an informed decision that puts you in the best financial position for your new home!

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