October 9, 2015

Moving? You might want to move your mortgage too

Transferring or ‘porting’ your mortgage to a new property can save you money

Are you moving? Sofa? Check. Dining-room table? Check. Mortgage?

There are times when your life plans and mortgage terms don’t always line up. Moving from one home to another is expensive enough, and unexpectedly breaking your mortgage can substantially add to those costs.

That’s why it is important for your mortgage to have the right options. The option of moving or “porting” your mortgage gives you the flexibility to buy your next home on your schedule.

With interest rates as low as they are today, the port option should be a very important part of your mortgage strategy.

 How porting can save you money

Porting your mortgage to a new home, also known as transferring or moving your mortgage, can definitely be a money saver. It is a particularly good idea to port your mortgage if your existing rate is lower than current rates or if you will incur prepayment charges by breaking your mortgage early.

Even if you require a larger mortgage for a new home in the future, you can blend your existing rate with the current rate for new funds to get a more favourable over-all interest rate and to lower your monthly payments. You will also avoid prepayment charges that are applied when breaking a mortgage early.

Depending on how much time is left on your term, these savings can be significant. If you have a variable rate mortgage, I suggest discussing port options with your bank, as there are varying policies that depend on how your mortgage is set up.

Moving soon? Next steps

If you will be moving in the near future, here are some steps that you can take to ensure you make the most of your mortgage options.

First, determine whether your mortgage has a port option. Then check your bank’s website, which should have a mortgage prepayment charge calculator. Use the calculator to see if it’s in your best interest to break your current mortgage, and whether it makes sense to move your mortgage to a new property.

You will want to know what the prepayment fees are and how much interest you would save by keeping your lower rate. You can also ask to speak to a representative to obtain your mortgage prepayment charge and have them complete the calculation for you.

Ultimately, I would suggest speaking with a mortgage specialist who will go over all of your mortgage options with you. The mortgage specialist will help you find a solution that provides you with the best financial benefit.

Kevin Lutz is RBC
Regional Sales Manager,
Residential Mortgages
@RBCKevinLutz

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