Mortgage Transfer

Does your current home no longer meet your needs? Whether your family is growing, you’re craving more space, or dreaming of a bigger garden, the reasons to move are plenty. But what if your mortgage is still active? Taking out a new loan might seem like the obvious choice, but it can come with significant costs. This is where a mortgage transfer, or property substitution, offers a smart alternative.

What is a mortgage transfer?

A mortgage transfer allows you to apply the conditions of your existing loan to a new property. Your current loan terms remain unchanged, and you stay with the same bank. This process is facilitated by a notary, who transfers the mortgage from your old property to the new one.

How does a mortgage transfer work?

Timing is critical for a successful mortgage transfer. Ideally, the sale of your current property and the purchase of the new one occur on the same day. However, there is some flexibility: if the purchase happens within two months and the proceeds from the sale are held in a blocked account, the transfer can still proceed. Your notary can provide more specific details about this process.

Why choose a mortgage transfer?

At first glance, taking out a new loan might seem appealing, especially with historically low interest rates. However, this option comes with several additional costs:

1. Prepayment Penalty
   Paying off your existing loan early often incurs a penalty, typically equivalent to three months of interest on the remaining amount. A mortgage transfer eliminates this cost.
2. Release Fees
   Before selling your current home, you’ll need to lift the mortgage tied to it. This process, called release, usually costs about 1% of the original loan amount, plus administrative fees.
3. Registration Fees
   A new loan involves paying registration fees again, usually around 1% of the loan principal. These costs don’t apply with a mortgage transfer.
4. New Mortgage Insurance
   A new loan often requires a new mortgage insurance policy, which may be more expensive than your current coverage.

The advantages of a mortgage transfer

In many cases, a mortgage transfer is more cost-effective than taking out a new loan. By avoiding additional fees, you can better manage your budget while moving forward with your plans. It’s always a good idea to crunch the numbers carefully. Consult your bank or a financial expert to ensure you’re making the best decision for your situation.

A mortgage transfer offers flexibility and cost savings, making it an ideal solution for moving to a new property without unnecessary financial strain. Interested in this option? Contact your notary or bank for tailored advice and guidance.