February 21, 2023 nkad3

Porting a Mortgage – Do you still need a down payment?

If you’re like most homeowners, you purchased your home, make your mortgage payments and the rest is history. However, many homeowners tend to overlook the various benefits or “mortgage features” that come with their mortgage, including this one – “Porting”


Okay, but what is it?


Porting is a mortgage feature that is typically found in most mortgages today. It is a feature that allows homeowners who are selling & buying the ability to “transfer” their existing balance (sale home) over to their new home. The main reason a homeowner would want to potentially take advantage of this feature is to avoid penalties that would otherwise be associated with breaking the existing mortgages that are still in their “contract term”.


In other words, instead of repaying the existing mortgage (+ Penalties) and getting a new mortgage altogether, porting a mortgage allows you to bypass penalties.


But what if my new mortgage needs are greater?


Commonly, homeowners would need to “top up” their ported mortgage. After all, it’s not often that we sell and buy our homes at even prices. In these instances, the existing lender usually can provide a top-up solution based on the qualifications of the borrower/s. There are some terms and conditions that the banks would consider when completing ports, but this is a simplified explanation.


Okay got it, but what about a down payment?


Regardless of whether you port your mortgage or not, the need for a down payment remains unchanged. Having said that, the amount of the down payment required to complete the purchase will come down to your ability to carry the desired mortgage. For example, if you have sufficient qualifying income and excellent credit, you may be able to minimize your down payment, while maximizing your borrowing. In most cases, homeowners that are porting their mortgage also intend to “transfer their equity” by using most of the proceeds from the existing home (sale) towards their new purchase.


Whether or not porting is right for you will come down to various factors, but the most significant one to consider is your potential penalties. In any case, it’s certainly worth exploring your options when presented with this opportunity. In other words, you should always speak to your existing mortgage provider about any penalties that you may trigger from your decision to change your living situation. Ask them about porting your mortgage and they can go into greater detail as it relates to you.


On the other hand, you can always reach out to us, and we can help set you on the right track to obtain the right information – (905) 455-5005

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