Can I buy a new house without losing my interest rate?
By SCOTT MOORE, REALTORIf you locked in a low interest rate two or three years ago, you probably don’t want to give it up! But what if your house isn’t working for you anymore?
I’ve talked with a few people recently that feel stuck in their current home because they don’t want to give up their low interest rate. I reached out to Winnipeg mortgage broker Marc Rouire at Castle Mortgage Group to see what the options are for people in this situation.
The good news is that Marc says that most fixed rate mortgages can be moved to a new home without penalty. Whether you want to upsize or downsize, porting your mortgage is an option that will let you move to a new home, and take your current interest rate with you.
If the new home is more expensive than the current home, lenders will handle this in one of two ways. The first way is to leave the rate you have on your current balance and then give you the new rate on the excess amount. The other way is to combine the old rate with today’s rate and give you an average for the new mortgage. A mortgage broker (like Marc) will be able to help you figure out what is best for you.
If the new home is less expensive than your current mortgage you may pay a penalty, but it would only be on the difference between the old and new mortgage amounts, not the entire amount.
Possession date matters! Most lenders will want the new mortgage to fund within 60 days of the old mortgage being paid out.
If you want to own both houses for a week or two (usually if you want time to make some renovations to the new home before moving in), bridge or interim financing is still an option when porting a mortgage. FYI that some lenders will only provide bridge financing for homes listed on MLS and not for private sales.
Ultimately, deciding whether porting a mortgage is the best option mostly depends on how much time is left on the term. If the remaining term is too short, or a lender is offering a special, it may not be worth it to port the mortgage. A mortgage broker will look at the big picture for your individual situation and help figure out the options that are best for you.
Bottom line is that if you were lucky to lock-in a great rate, keeping that rate doesn’t mean you’re stuck in your current house. There are options for retaining that rate and moving on to a home that better suits your lifestyle today.
Feel free to reach out to Marc Rouire at Castle Mortgage if you want to review your mortgage financing options. If you’d like to get an idea of what the market value might be for your current home or the type of home you’d like to move into, just reach out to me and I’d be happy to give you some numbers.