Moving to Alberta? Here's what you can do with your mortgage

If you didn't realize, "Alberta is Calling." And with relatively affordable homes, it's no surprise that Alberta has seen an influx of about 40,000 people from Ontario moving to the Prarie province, in 2022.

If you happen to be one of those Canadians thinking about moving from out of province to Alberta, there are a ton of things to consider, including the cost of living, job prospects, and the real estate market. As of August 2023, Alberta's housing sector has been identified as a seller's market with a Sales-to-New Listings Ratio (SNLR) of 77%, indicating a scenario favoring sellers due to strong sales activities across the province. The demand for affordable single-family homes is outstripping supply in many cities within Alberta, making it an opportune time for home purchases and property investments. Housing prices are on an upward trajectory, with average sale prices in both Calgary and Edmonton expected to rise throughout 2023. Specifically, the average price of a home in the Edmonton area was $397,811 as of August 2023, marking a 7.1% annual increase.

But, for current homeowners, one of the biggest things you'll need to think about is what to do with your mortgage. If you've already got a mortgage in your home province, you might be able to transfer it over to your new home in Alberta–which can save you a lot of time and money.

Porting your mortgage comes with a bunch of benefits, like being able to keep your existing interest rate and avoiding pesky prepayment fees. But there are also some things you'll need to watch out for, like changes in the housing market, different rules and regulations in Alberta, and the possibility that you might not be eligible for portability.

What options do you have if you’re moving to Alberta?

When it comes to any provincial move in Canada, you have a couple of options when it comes to your housing situation. 

1. Rent out your place and rent out a new place in Alberta

When it comes to big moves, you may not want to completely eliminate your options if you choose to move back home. If possible, rent out your home in your current province and look to rent a place in Alberta. 

2. Refinance your current property to fund the down payment for your new property

You can also choose to keep your original property–and rent it out–and then get a second property in Alberta. This of course means you’d need to refinance or qualify for a second mortgage, so it’s important to talk to your lender to discuss if this is financially feasible.

3. Port or transfer your mortgage

Porting your mortgage can offer several advantages. It allows you to avoid penalty fees for breaking your mortgage agreement if you sell your current home and purchase a new one. This process enables you to retain your existing lower rate, potentially add to your mortgage through a rate ‘blend’ if needed, and continue with the same lender, thus possibly reducing the amount of work required during your move. Porting is particularly beneficial when your existing mortgage rate is lower than what's currently offered by lenders, as your blended rate will likely be lower than starting a new mortgage from scratch.

If you’re eligible–and if you’re comfortable with altogether leaving your province behind–you can also look into porting your existing mortgage to a new property in Alberta. 

Thinking about porting your mortgage?

What does it mean to port your mortgage?

If you're looking to move to a new home, you might be wondering what happens to your mortgage. Do you have to break your terms and pay a bunch of fees? Well, there's actually something called "porting" your mortgage, which lets you keep your existing mortgage and transfer it to your new home. It's kind of like taking your phone number with you when you switch carriers.

Now, here's the catch. Let's say you're moving up or down, and the value of your new home is different than your old one. That's where things can get a little tricky. But fear not, my friend, because some mortgage lenders offer a "blend and extend" option. This basically lets you mix your old interest rate with the new one, which can help you avoid those pesky penalty fees. Just keep in mind that there may be some administrative fees involved.

Can you port your mortgage?

When it comes to porting your mortgage, you need to find out if you're eligible. Talk to your lender and check your current mortgage contract to see if porting is an option. If it's not in there, it'll be tough to get them to change things now.

Porting your mortgage can be tricky and it depends on different factors. Firstly, you can only port if you have a fixed interest rate–so you might have to switch from a variable rate before you can qualify for portability. Your lender will also check your financial situation, such as your income, employment, debts, and credit score, to see if you're eligible.

To improve your chances of getting approved, it's a good idea to check your finances before you talk to the lender. Make sure you don't have any big debts and that your taxes and income filings are up to date.

It’s important to note, however, that there's no guarantee that the lender will say yes to your request. They could deny it if you can't prove your income, if your income has gone down since you got your mortgage, if your monthly debt payments are too high, if your credit score has dropped, or if they've changed their rules. 

But it's worth considering porting your mortgage as an option.

How to port your mortgage to Alberta

The process of porting your mortgage to Alberta is relatively straightforward. Here are the steps you'll need to follow:

Talk to your lender

Before you start porting your mortgage, you need to know if your lender will allow it. Again, you’ll need to figure it out if you’re eligible to port or transfer your mortgage. Different lenders have different rules, and some don't allow porting at all. Also, if you have a variable-rate mortgage, you may have to switch to a fixed rate to make it portable, which could mean extra fees. So, it's best to contact your lender and find out what their policies are.

Check the porting time limit

Porting your mortgage takes time, and you need to know how much time you have. Your lender will set a time limit for you to complete the port and sell your old home. Typically, the time limit is between 30 and 120 days, but 30 days can be very tight. It's best to aim for 120 days, which should give you enough time to close the sale of your old home and buy your new one.

Get a mortgage pre-approval

Now it's time to get serious and start looking for a new home. Before you start shopping, get pre-approved for a mortgage so you know how much you can afford. And be sure to shop around for the best deal!

Calculate your porting costs

Porting your mortgage isn't free, unfortunately. There might be administrative fees or other costs involved, so make sure you know what you're getting into and budget accordingly.

Complete the paperwork

Paperwork, paperwork, paperwork. You'll have to fill out forms for the portability agreement and a new mortgage application for your new home. Read everything carefully and don't be afraid to ask for help if needed.

Research Local Real Estate Laws and Regulations

Each province has its own set of real estate laws and regulations. Familiarize yourself with Alberta's real estate regulations to ensure a smooth transition.

Close the sale of your old home and buy your new one

Finally, the big moment has arrived. You've completed all the steps and now it's time to close the sale of your old home and move into your new one. Work closely with your lender and real estate agent to make sure everything goes smoothly, and then kick back and enjoy your new digs!

Should you port your mortgage to Alberta?

In conclusion, porting your mortgage can be a great option if you're moving provinces to Alberta and want to avoid penalties for breaking your existing mortgage. By following the steps outlined above, you can easily transfer your mortgage to your new property and keep your existing interest rate.

However, it's important to remember that porting your mortgage isn't always the best option. If you're moving to a significantly more expensive property, you may need to take out a new mortgage with a higher principal. In this case, it may be better to break your existing mortgage and negotiate a new rate with your lender.

Overall, it's important to weigh the pros and cons of porting your mortgage and to consult with a financial advisor or mortgage specialist before making a decision.

So, if you have questions about what financially makes the most sense for you, connect with one of Pine's mortgage agents who'd be happy to connect. With the right information and support, you can make an informed decision about how to finance your new property and move to Alberta.