First, have you paid off your mortgage?
If your mortgage is paid off and the term has ended, moving homes is a much easier process. You’ll also hopefully receive a large sum of money when you decide to sell – because you won’t be breaking any term contracts and won’t have to cover any remaining balances or fees.
However, when buying a new home, you’ll need to take out a new mortgage, with new terms. You can either use the money you received from the sale of your old house to make a dent or cover the cost of your new home, or you can use that money differently. Perhaps travel, investments, etc.
So, what happens if your Mortgage Is Not Paid Off
If you would like to move to a new home before your current mortgage is paid off, you will still need to pay back the remaining money you have borrowed. If the price you are selling your home for is less than the mortgage on your home, you will need to pay the difference. If the price you are selling your home for is more than the mortgage, you will likely make a profit on the sale of your home and the mortgage will be covered. However, don’t forget that you are likely to incur fees for exiting your mortgage before your term is up.
Porting Your Mortgage
In some cases, borrowers can port their mortgage to their new home. This allows borrowers to keep the same mortgage (rate, terms, etc.) while simply borrowing a different amount of money relative to the price of the new home. For example, if you are moving to a less expensive home, you may need to reduce your mortgage.
This agreement means that both parties agree to sign the mortgage over to a new property but to maintain their relationship. Take note that you will still need to qualify, and the property must be approved and appraised.
Homeowners typically decide to port their mortgage when they currently have a great interest rate with their current lender. Borrowers also choose to port to avoid penalties.