Mortgage Tools
Can You Sell Your House and Retain a Prior Mortgage?
The idea of taking out a new mortgage when you buy a new home may not be very appealing, especially if you have a mortgage with lower rates than the current market rate. Can you sell your house and retain your prior mortgage? If your mortgage includes a portability option, then you can.
Mortgage Portability
If you secured a great rate and favourable terms on your current mortgage, why would you want to give that up when you sell your home? To avoid having to renegotiate and, perhaps, having your costs increase, be sure your mortgage is portable.
When your mortgage is portable, you can transfer it to your new home before it matures with no prepayment cost or penalty. There are some legal fees associated with preparing the mortgage documents and registering the mortgage on the new property, but no costs for discharging the mortgage before maturity. Most lenders do require a property appraisal and credit review. If you have mortgage insurance, you can transfer it too.
In addition to transferring your mortgage, most lenders will allow you to add on to it if you need more funds to finance the purchase of your new home. Generally, they allow some blending of interest rates to even out costs when the current rate is higher than the rate on your existing mortgage.
If you find that your current mortgage is too high for your new home, you may be able to pay down a certain percentage without penalty when you transfer it. Your CMI broker can discuss this and all other options with you.
Portable vs. Assumable
If you've read anything about portable mortgages, you might also have come across the term "assumable mortgage".
An assumable mortgage is one that allows the buyer to take over the existing mortgage on the property they are purchasing. This option is most attractive in situations where the mortgage has a significantly lower rate than current interest rates. To assume a mortgage, the buyer must be approved by the lender.
Selecting the Right Mortgage for Your New Home
Portability and assumability are just two of the many considerations you need to make when purchasing a new home.
Fortunately, CMI certified mortgage brokers are available to help you make sense of all of the terms and conditions associated with mortgages.
We can help you decide between a fixed and variable rate, open or closed mortgage, and various amortization schedules. We will discuss the pros and cons of each option, giving you the knowledge you need to make the best choice.
As brokers, we are not beholden to any particular lender, so you can be assured clear, impartial advice.
Can you sell your house and retain a prior mortgage? Yes, you can. Talk to a CMI broker today to learn more.
