This has been said for several months: despite a slow rise in real estate rates since December, they continue to be at extremely low levels. Still, no one can predict their evolution in the coming years.
In other words, nothing says that borrowers will be able to enjoy, in 2, 5 or 10 years, the same favorable rate conditions. A clause can nevertheless allow you to keep the advantages of your loan and to protect you against the risk of soaring property rates: the transferability of the mortgage.
Loan portability, Masuke?
The word seems technical, but the operation is simply to transfer the terms of your current loan to finance a new property.
Let’s say that for your first real estate purchase, you bought a two-bedroom apartment last year, when interest rates hit their all-time low. A few years later, you buy bigger suite at a happy event.
If you have loan portability, your new home will be funded in part by your first loan. Financing your new acquisition includes 2 lines of loan:
- a first part relating to the current loan. Its amount is that of the capital remaining due;
- a portion corresponding to the new mortgage that you subscribe to the current conditions.
The stakes are clear: the advantageous conditions of the 1st loan line reduce the overall cost of financing.
Overall, if you have the choice between a loan offering an attractive rate, and a second with a real estate rate a little higher but including portability, it is better perhaps to think before spontaneously opt for the 1st. Especially if you do not consider your real estate acquisition as a very long-term investment.
Is a loan transfer trading?
Generally, no. It all depends on the commercial policy of the banks. Clearly, they apply the transferability or not to all of their customers, not case by case.
Check the general credit conditions. These indicate whether or not it is possible to transfer the loan and, where applicable, the terms of application. Attention because these can vary from one establishment to another. Among the conditions required, banks can ask for example:
- that the goods bought and sold are of the same kind;
- the Housing Credit Agreement;
- that of the insurer;
- or that the sale and purchase take place on the same day.