Recently we were joined on the REAL Collective Podcast by Rebecca Nickerson (Mortgage Agent) from The Mortgage Advisor. There is a lot happening in the real estate world right now. It was a pleasure to sit down with Rebecca to get the scoop on porting mortgages, bridge financing and mortgage plus improvements.
What is porting a mortgage?
Porting a mortgage is the process of transferring an existing mortgage from one property to another. This allows the borrower to keep the same interest rate, terms, and conditions of the original mortgage.
When you’re porting a mortgage, it generally means that you’re not likely to increase the amount that you’re borrowing or changing the terms of the mortgage and are locked into the contract that you have. Typically, we’re upsizing or downsizing and not moving laterally. In those cases, there are some solutions that you can explore.
- If your lender allows you to port your mortgage it’s possible that they will allow you to add a secondary mortgage on top.
- Blend and Extend Mortgage: the lender will take your existing rate and look at what rates are being offered at the time and come up with a comparable rate. You may lose your extremely low rate but you’re also not locking in at a very high rate. This also prevents you from paying a penalty on your current mortgage.
What we’re seeing right now is that houses that are priced properly are selling in a week or two. The houses that aren’t priced accurately are sitting on the market. It’s a balancing act. If your home sits too long buyers will come in and try to give you a low offer and in the end your home will ultimately sell for less.
What is bridge financing?
Bridge financing refers to a short-term loan that helps individuals bridge the gap between mortgages. So, if you’ve purchased a new home and sold your current home but the closing takes a little bit longer or you’ve given yourself a couple of weeks to move in, you may need access to a bridge loan. To be clear, the dates that matter here are the closing date (the day you take legal possession of your new home and legally hand over your previous home) not the date that your home is sold by contract.
Bridge financing can come with some higher interest rates. It also means that you don’t have to qualify for two mortgages at the same time since it is a short-term tool.
What is a purchase plus improvements mortgage?
A purchase plus improvements mortgage is a type of mortgage that allows you to borrow money for home renovations or improvements. The amount you can borrow is based on the expected value of your home after the renovations are complete but is capped at a certain amount. This type of mortgage can be a good option if you’re looking to make major upgrades to your home and want to add the cost of the renovations to your mortgage.
It’s considered an insured product so that usually means that there’s going to be an insurance premium associated with it. Typically, the lender is going to request quotes from qualified experts and the improvements are required to increase the value of the home.
The Benefits of a Mortgage Broker
Using a mortgage broker can offer benefits such as access to a wider range of lenders, more loan options and rates, and assistance with the loan application process. They also provide personalized advice and support throughout the home buying process. If you’d like to get in contact with Rebecca Nickerson to find out more about the products we discussed, you can reach her at: rebeccanickerson@themortgageadvisors.com
For more valuable real estate related tips, you can check out the REAL Collective Podcast on iTunes, Spotify or YouTube.
