Portable Mortgages
Mortgage portability is an attractive choice that can save you money when your existing mortgage rate is lower than current rates.
How does a portable mortgage work?
With a portable mortgage, you have the flexibility to sell your home and buy another-even before your existing mortgage matures-without the prepayment charges sometimes associated with discharging an existing mortgage mid-term. (Note that the purchase and sale must happen within 90 days of each other.)
When you port your mortgage, you simply pack up the terms, conditions and interest rate of your mortgage and have it transferred to your new property. While you'll incur some legal fees for the preparation of mortgage documents (as you would with any home purchase), you'll avoid prepayment charges.
Other advantages include:
- If you need additional funds for your new home purchase, you can likely borrow more funds and add on to your existing mortgage, providing your income and your new property meet RBC Royal Bank's criteria. Your new mortgage rate is a "weighted average" of the current rate on the new funds and your existing rate on the existing balance.
- If the mortgage you're porting is too large for your new home, you may be able to pay down 10% of your original balance without a prepayment charge. Only the remaining excess balance may be subject to a prepayment charge.
One thing to note-you cannot combine a portable mortgage with an assumable mortgage.
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