How many times do you plan on moving in your lifetime? Statistics show that people will now move an average of 11-12 times in their lives. This is a pretty startling statistic that reminds us that our "Forever Home" may not always be forever.


Do you know if your mortgage is "Portable" to your next property? I do... Portability is the option to bring the remaining term of your current mortgage to another property, in order to reduce or eliminate paying a prepayment charge/penalty.


An important thing to remember when porting is that most lenders will expect you you to pay any pre-payment penalties as soon as your first home is sold. They will then reimburse your penalty/charge once your new home purchase  is completed. This is critical to remember as you may have to budget to have that money out of pocket for a small period of time.


Portability can work for you in 3 different scenarios:


(P.S. If you want to brush up on your mortgage terminology, find my Glossary HERE )


Port with a decreased mortgage amount

This is often the case when downsizing or moving from a more expensive city to a community with lower property values. What this means is that your new mortgage amount will be less than the total mortgage owing when you sell your first property. While most lenders will allow you to port your mortgage and decrease the total owing, there will usually be a penalty to pay based on the difference between the two mortgages. This should be discussed with your broker and lender so that you know how much of a penalty you will have to pay when everything is completed.


In this scenario, your interest rate and term will remain the same, but your mortgage amount will decrease.


Port with the same mortgage amount

This is an unusual situation but it does occur occasionally. In this case, your total mortgage amount will stay the same based on the property you are buying. What is tricky here is that although the amounts are the same, you will again still have to pay the penalties and wait for the refund to come in from your lender once you have closed on your new property.


Your interest rate and term will remain the same, as will your total mortgage amount.


Port with an increased mortgage amount

This is a very common scenario for people who are either relocating or are looking for a larger house to accommodate a growing family. When all is said and done, your new mortgage amount will be the original mortgage amount, plus any extra needed to purchase the new, more expensive property.


When increasing the amount of your mortgage, your new interest rate will be 'blended'. What happens with a blended interest rate is that the original mortgage amount stays at your original mortgage rate, but any new money (the increased amount) is loaned to you at the lender's 'current' rates. This can be either higher or lower than your existing rate but should be discussed with your mortgage broker, so you understand the consequences of blending. This is a complicated calculation to make, but one that needs to be done to determine if porting is the right option for you in this case.


With this option your term will remain the same, but your total mortgage amount will increase.


The "Blend and Extend" option

Some lenders will allow you to blend interest rates, and extend to a longer term. This can be beneficial if you feel you have a good rate and product and would like to stay locked in with that rate for a greater period of time. In my experience, this can be a good tactic to consider when contemplating an early mortgage renewal .


Whether you are increasing your mortgage amount or keeping it the same, this option is a good way to negotiate a better rate with your current lender  while avoiding the cost of pre-payment penalties.


How Do I know What Is My Best Option?

There are a variety of Calculators  on my website you can use to compare these options. And when you're ready for a more accurate look, APPLY ONLINE and I'll be happy to go over your options in great detail.