Portable Mortgage

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Definition

A portable mortgage is the one in which an individual has the option of transferring an ongoing mortgage of a property to another property with the same lender without penalties and allowing to retain the terms and conditions as well. Hence, if the individual wants to sell the existing property, he/she can transfer the current mortgage of the property to the new property. Portable mortgage could be thus beneficial if an individual has a mortgage with a low interest rate and wants to keep it. Generally, there is no cost associated with the transfer. However, if the current mortgage does not have a portability feature, one could be charged a fee to transfer the old mortgage to the new one property. Also, the mortgage will be registered under a different title with the new home.

Main disadvantage of a portable mortgage is that every lender doesn’t offer this type of mortgage; therefore, one must check the terms and conditions with the lender before getting into a contract. Another disadvantage is that one needs to have an excellent credit history to qualify for this type of mortgage.

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LAYMEN TERMS

Let’s say you buy a house by taking a mortgage loan. After a couple of years, you come across a better house and you want to buy that house. You still don’t have enough money to buy the house and you would require taking loan. In this case, instead of taking a new mortgage loan on the new property you can transfer your old loan on the new one and buy the second house.

HOW DOES THIS TERM APPLY TO YOU

Portable mortgage is perfect for people who move a lot, or a company that shifts its office to different cities every few years. Suppose you own a business, after a few years your business grew and now you need a bigger, better place to shift your office. Even though you’re making profit, you don’t want to pay higher interest rate in order to move to a bigger property and your old mortgage is still not over. In this case, portable mortgage is beneficial for you since you can ‘port’ or carry your existing mortgage to the new property at the same interest rate with the same lender.

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