Buying a house is not comparable to paying for dinner at a restaurant, but neither to purchasing a new car or a TV. A property is something you may buy for the first time in your life or it may be a second one meant for going on vacation or just as an investment. Buying a house requires money, so it is not frequent for people to apply for a mortgage and gradually pay it off during the following years, even if this solution is more expensive in the long term because of the interest. The amount you have to pay may vary based on your credit score:
- if it is excellent, you may find yourself paying low interest because the bank is taking a little risk;
- if it is poor, this may lead to high-interest rates or even the inability to apply for a mortgage.
Still, the credit score is not the only thing that can condition the convenience of a loan: it is important to compare products of different banks to make a decision.
Paying Off A Mortgage is Time-Demanding
If buying a house is not exactly like purchasing new clothes for the summer, applying for a mortgage may still not be the solution to an economic impossibility to pay everything immediately. It requires several years, even decades, to pay off a mortgage, so one should take into the exam, not just job stability but also saving capacity and any emergency reserves available in the bank account. Life is so unpredictable that even the most stable job in the world should not be taken for granted, as companies can go bankrupt. Moreover, wars, pandemics, and natural disasters can strain the economy over the years, so no job is safe and secured forever. Finally, a mortgage is like a forced bond between the customer and the lender. It is a good idea to make sure you are comfortable being a customer of the particular bank where you have applied for the loan and that the conditions are still the best for you. Without these two premises, you may consider the eventuality of porting your mortgage from your bank to another so that you can take advantage of better conditions, flexibility, or even an overall experience as a customer.
Why Transfer Your Mortgage?
It may take much time to pay off a mortgage, so it also should not be taken for granted that we will always remain customers of the bank where we have applied for the loan. Most people tend to apply for a mortgage at the same place where they have already their bank account, but there are many reasons why they may want to leave:
- the bank changes the conditions unfavorably for keeping an account there;
- you have found another mortgage with a lower interest rate and would like to migrate your existing loan while keeping your current bank account in the same place.
Is It Complex to Transfer a Mortgage?
Porting a mortgage from one bank to another is a task that may take up to one or two months until you completely cut any tie with the previous lender. Negotiating eventual terms and conditions with the actual lender is generally the quickest way to take advantage before considering moving elsewhere. If you still prefer to change banks or it is not possible to negotiate actual conditions, you could manage to apply for the new mortgage by asking for a migration of your existing one. Your house is already a guarantee for the actual lender and this will be the same with the new one, so it is generally easier to port a mortgage elsewhere than fully applying for a new loan.
Porting a mortgage from one bank to another is not an immediate task. It may provide several benefits, from better conditions to a lower interest rate, so it is something you should consider instead of being always loyal to the same bank if you think you are going to take advantage of a migration.
This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.
© 2022 Alessio Ganci