Portable Mortgage

What is it?

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

You can check to see if your house loan is portable by reading your contract and/or calling your 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 property loan 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% 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 debt out when you close on your present property. For more about Payout Penalties.

- This could add up to thousands of dollars.

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

- It's less expensive to take your home loan with you than writing up a new one.

• You don't have to qualify for a new home loan.

- Perhaps when you took out the original contract, 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 home loan, but if your existing contract is portable you can take it with you. Then, 3 years from now, you should be well establish to get a new mortgage.

What are Some Disadvantages of a Portable Mortgage?

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

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

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

- You could take the mortgage with you and do a Mortgage Blend or Blend and Extend.

- You could take the loan with you and get a second mortgage. (Usually a second will be at a higher rate than a first). 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 brokers for every home we have purchased since somewhere in the 1980's.

• You could also be requiring less than your present debt, if say you were downgrading to a smaller house.

- You might be able to put 10 or 15% down on your home loan without penalty, before you transfer the portable. Check your documents and/or talk to your lender.

Do Your Homework

If you have a portable mortgage and are moving, please go to your present lender and get all the details before assuming that you can just take the debt with you and everything will be fine.

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

As in many mortgage and real estate options, some rules and options are different depending where you live.

As an example, here are 3 sites from 3 different countries explaining a portable mortgage. The difference are very slight, but as an example, a portable mortgage in the United States is a newer add-on and the borrower in most cases, has to pay a slightly higher interest rate.

Of course, as always, everything is subject to change. ;)

American

Australian

Canadian

For More Information about Mortgages

Mortgage Assumptions

Seller Financed Mortgages

Bridge Loans

Blend and Extend Mortgages

About Mortgage Brokers

Qualifying Buyers

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