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.Explore Definition
Benefits of a portable mortgage are:
• An individual won’t have to pay penalties in case he/she moves the loan to a new property
• An individual can keep the same interest rate without going through the approval process again
• An individual can hence avoid the closing cost on the new property, since he/she has already paid the first time
• Closing costs can add up substantially, so portable mortgage provides the individual the opportunity to increase his/her down payment on the new property
• The mortgage is profitable if the rates on one’s current mortgage are less than the available rates in the market