How to move to a bigger property while keeping your interest rate?
When buying a second home, there are more factors to consider than with your first home, such as your existing mortgage type, interest rate, and provider. The question often arises: what should I do with my mortgage?" One of the options is to keep your current interest and conditions. The article discusses the possible options for porting a mortgage in the Netherlands.
The process of moving your mortgage to another property is called porting. Mortgage porting means transferring your mortgage to a new property. Moving your current mortgage to a new property can be cost-effective since you don't need to pay exit fees or early repayment charges. With increased mortgage interest rates by 2 % or 2.5 % in the last year, porting your low-interest rate can save you money.
Porting a mortgage involves transferring the terms of your current mortgage to a new property. This includes maintaining the same interest rate, fixed-rate period, and fees. However, some lenders may allow for modification of the mortgage terms, such as extending the duration or changing from a joint to an individual mortgage. While many lenders advertise the option of mortgage porting, it's important to note that it's not a guarantee, and the lender has the right to reject a request to port the mortgage loan.
Pros
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Favorable interest rates and conditions.
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Lower monthly payments assuming interest rates have increased.
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No penalty.
Cons
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There's a short time to complete the process.
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You need to be lucky to find a new property in time.
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Sometimes, you'll miss out on better rates and conditions.
A few factors can influence the lender's decision to allow you to port a mortgage.
1. If your mortgage lender allows you to port your mortgage:
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If your current home was eligible for an NHG mortgage and the new home is not eligible for a mortgage with NHG.
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Sometimes, lenders do not permit changing the mortgage type, duration, or other conditions.
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Any discounts on the rate related to the current home cannot always be transferred.
2. Your financial circumstances:
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You should be eligible for the new financing.
If you buy a home that requires a larger mortgage than you currently have, your lender may allow you to blend and extend a ported mortgage. There is no penalty to pay because you are not breaking your initial mortgage.
When you port your mortgage to a less expensive home, some lenders can allow you to make prepayments to reduce your mortgage balance. Many lenders permit porting to a cheaper property and won't impose any penalties if your mortgage falls within the prepayment privilege limit.
