Mortgage Substituion

Jan 19, 2024

Mortgage substitution, also known as home loan portability, allows you to keep your existing loan while changing the property it secures. This feature can be beneficial when moving to a new property, as it can save time and potentially reduce costs.

This process is known by various names, including security swap, mortgage substitution, home loan transfer, and security substitution. All these terms refer to the same idea: maintaining your current loan while changing the property it secures.

The benefits of this process can be significant. You can retain your loan's structure and features, avoid break costs, potentially reduce costs associated with buying and selling, and streamline the process.

However, it's important to note that not all loans are portable. Therefore, it's advisable to consult with your lender or review your contract carefully. While most standard home loans offer portability, there are exceptions.

The costs associated with loan portability can vary, but it can potentially offer significant savings compared to closing your current loan and applying for a new one.

Loan portability can be beneficial when buying and selling property, especially if you want to avoid break fees or if refinancing isn't an option due to personal circumstances or changes in lending criteria.

The process of security substitution can be carried out through same-time settlement or deferred settlement, depending on your situation.

The property you're transferring to needs to be of equal or greater value, and in most cases, it needs to be a similar type of property. If your new property is more expensive, you may need to apply for a loan increase before applying for portability.

While there are many advantages to keeping your current loan and changing the security, there are also some limitations. It's crucial to consult with your lender or mortgage broker to determine if your loan is eligible for a security swap