Portable Mortgage

What is it?

A portable mortgage is an existing mortgage that allows you the option to "port", or transfer that mortgage to another property that you may have purchased.

You can check to see if your mortgage is portable by reading your mortgage documents and/or calling your mortgage lender.

What is the Advantage?

Whether you want to take advantage of a portable mortgage when you move, depends on your circumstances.

Here are a couple reasons to take your mortgage with you when you move.

* You have a closed mortgage locked in for 3 more years at 4.5% and interest rates have now went up to 6% for a new mortgage with the same term.

- You will have 3 more years to enjoy the lower rate.

* You avoid the possibility of paying a huge "Interest Differential Penalty", should you opt to pay the mortgage out when you close on your present property.

- This could add up to thousands of dollars.

* You should save "some" closing fees/costs associated with writing up a new mortgage.

- It's less expensive to take your mortgage with you than writing a new mortgage.

* You don't have to qualify for a new mortgage.

- Perhaps when you took out the original mortgage you were working for "We Make Things Manufacturing" and now you started your own business.

The banks may not want to write you up a new mortgage, but you can take your old mortgage with you whereas 3 years from now, you will be well establish to get a new mortgage.

What are Some Disadvantages?

Lets look at some pitfalls of taking a portable mortgage with you to your newly acquired home.

* You have a existing mortgage for $100,000.00 on your present house but need $125,000.00 for your new home.

- You could take the mortgage with you and put an extra $25,000.00 cash on the new house if available.

- You could take the mortgage with you and get a second mortgage. (Usually a second mortgage will be at a higher rate than a first mortgage). You would want to calculate whether this was an advantage to you.

- You could borrow the $25,000.00 with a secured loan and put into the new property. Again, do the calculations first.

- Talk to a mortgage broker and see if they can come up with a solution for you. My wife and I have used mortgage brokers for every home we have purchased since somewhere in the 1980's.

* You could also be requiring less than your present mortgage if say you were downgrading to a smaller house.

- You might be able to put 10 or 15% down on your mortgage without penalty, before you transfer. Check your mortgage papers and/or talk to your mortgage lender.

Do Your Homework

You don't want any unpleasant surprises once your present house is sold.

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