Articles

Mortgage Portability

 

The Guise of Mortgage Portability

"Is my mortgage portable?"
The answer is probably yes.
"Is it easy to port my mortgage?"
The answer is probably not.
 
When you're selling your existing home and buying something else, porting your mortgage involves transferring the remainder of your current mortgage term, outstanding principal balance, and interest rate to that new property. Although this might sound like a good idea to keep a low rate intact, in reality, sometimes it feels like the stars have to align for it to work out.
Most people assume that porting a mortgage guarantees mortgage qualification on the purchase of a new property using the mortgage they got when they bought their last property. Often they feel confident about their ability to simply port their mortgage, and might even sell their existing property or write an offer on a new property, believing that they are already qualified (because they were qualified before). This isn't the case.
Just because your mortgage is portable, doesn't mean you'll somehow magically qualify to buy a new property with an old mortgage. Mortgage financing doesn’t work that way.
Porting a mortgage requires full re-qualification, it's not a loophole to purchase a new property without disclosing changes in your financial situation. The lender will ask for new employment documents and pull a new credit report. It is the mortgage qualification process, with additional conditions.
The most common reasons porting doesn’t always work out as planned
  • You may not qualify for the new mortgage.
  • The property you are buying doesn't meet the lender's guidelines.
  • You still need a down payment.
  • You'll most likely have to pay a penalty, even if it's refunded.
  • Timelines rarely work out.
So, if you are in a situation where you have an existing mortgage, and you're looking to buy something else, and you'd like to discuss mortgage portability, please don't hesitate to get in touch anytime! I'd love to walk you through your options.
There is no substitute for solid mortgage advice. Porting might make sense, but then again it might not. Either way, I'll make sure you know exactly where you stand.
 

Speculation Tax

Paper Tenancies

Introduced in 2018, the BC speculation tax targets the owners of unoccupied residential properties. Individuals, companies, and trusts that own residential properties within the Kelowna and West Kelowna, amongst other geographic regions, are required to pay the tax or otherwise prove that they qualify for an exemption.

One of the ways that an owner of a property can be exempt from the speculation tax is to have a tenant occupy the property for at least six months in a year (the threshold for
2018 was only three months). This is known commonly as the "long term rental exemption" or the "occupied by a tenant exemption".

A question we have frequently received contemplates avoiding the speculation tax through the creation of what can accurately be described as a "paper tenancy".
Please see the attached article for further detail.