Key Issues to Discuss with Your Bank Before Selling Your Home
When it comes to selling your home and potentially relocating your mortgage, it's essential to approach the process with informed clarity. Your financial institution views this transition as a fresh endeavor, subject to various evaluations, including but not limited to:
Financial Assessment Under the Current Stress Test: It's crucial to recognize that even when moving your existing mortgage without requesting additional funds, you must requalify. Your bank will scrutinize your financial situation, taking into account the prevailing stress test requirements.
Appraisal of the New Property: The value of the new home you intend to purchase will be appraised and the lender will use the purchase price or the appraised value - the lesser of the two values.
Portability Clause in Your Mortgage: Check if your current mortgage includes a portability clause that enables it to be transferred to a new property. Without this clause in your commitment, your mortgage terms can't be moved and could entail penalty charges. Additionally, your new financing will be subject to prevailing interest rates, which can significantly impact your financial standing and your initial decision to sell.
Given the current dynamics of the real estate market, it's imperative for homeowners to proactively engage with their bank before proceeding with the sale of their property. Understanding the specific details of your financial situation and available options is paramount to ensuring a smooth and satisfactory experience when buying or selling your home.
If you're interested in learning more about the mortgage pre-approval process, our mortgage broker, John Chrisanthidis, for expert guidance.
John Chrisanthidis, Mortgage Broker (FSCO Lic. M08001294 Mortgage Intelligence FSCO Lic. 10428)