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.
Favorable interest rates and conditions.
Lower monthly payments assuming interest rates have increased.
There's a short time to complete the process.
You need to be lucky to find a new property in time.
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:
If your current home was eligible for an NHG mortgage and the new home is not eligible for a mortgage with NHG.
Sometimes, lenders do not permit changing the mortgage type, duration, or other conditions.
Any discounts on the rate related to the current home cannot always be transferred.
2. Your financial circumstances:
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.