Porting a mortgage, what if we overpaid for our house?


Dear David,

We’re ready to downsize. We still owe about $80,000 on our mortgage, which doesn’t come due for another 18 months. Would you advise we wait it out before moving? – FREEDOM 55

DEAR FREEDOM: If the time is right or you to downsize, your mortgage shouldn’t hold you back.

Assuming you hold a traditional mortgage with a major lender, it should be fairly easy to “port” the mortgage when you’re ready. Porting means your lender will take your current mortgage (with its existing rate and terms) and transfer it to your new property, provided your purchase meets their lending criteria.

Porting is a strategy for those who are selling their current home and buying a new one at the same time. It remains popular because downsizing doesn’t necessarily mean buying a lower-priced home. The move to retirement-friendly digs is often lateral and can sometimes be an even larger investment than your family home (the transition from backsplit to bungalow is one such example). Depending on the value of your current home and the price of your new one, you may be able to either port your existing mortgage or pay off your balance and sign up for a new term while blending the rates.

PRO TIP: Check with your mortgage advisor before you do anything.  Some “lowest rate” mortgages may not allow the flexibility of porting.

Dear David,

We got caught up in a multiple offer situation last week. My husband thinks we paid $10,000 too much for the home we bought. Is there any way to get out of the deal? – BUYER’S REMORSE

DEAR BUYER: When a signed agreement has no conditions and the deposit cheque has been delivered, the deal is firm. It’s a binding contract. 

In a multiple offer situation, someone must pay the highest price. It’s part and parcel of securing the property. When decisions are made in the heat of the moment, it’s not uncommon for buyers to get cold feet or have second thoughts, but walking away from a firm deal has consequences. If you walk, you’ll likely lose your deposit and may be responsible for the seller’s expenses or shortfall, should they need to sell the home again. No one can force you to close the transaction, but your Realtor and lawyer will likely advise that the penalties of not closing can be more substantial than what you feel you may have overpaid.

Let’s talk about the $10,000. It sounds like a lot of money, until you consider how quickly our market is changing. If the value of a $500,000 home were to appreciate four percent this year, it would make up the difference in about six months. This is a conservative estimate, as our local market is predicted to increase much more than that.

PRO TIP: Remember that you loved this house enough to compete for it. If your only concern is that you may have overpaid slightly, the market will probably take care of the difference for you. #AskDavid #Advice