Portability refers to the option of transferring your existing mortgage from one property to another when you move. This feature allows you to keep your current interest rate, loan terms, and lender instead of breaking your mortgage and starting a new one.
How It Works
If you sell your current home and buy another, a portable mortgage lets you move the balance and terms of your loan to the new property. Often, if the new home is more expensive, you may need to apply for additional funds from the lender, sometimes at a blended rate.
Benefits
- Saves money: Avoids penalties for breaking a mortgage early.
- Keeps your rate: Preserves the interest rate you locked in, even if market rates have gone up.
- Convenience: No need to renegotiate a full mortgage with a new lender.
Drawbacks
Not all mortgages are portable, and those that are may come with restrictions. Lenders may impose time limits between selling and buying, or require you to re-qualify under current lending rules. If the new property costs more, you may need additional financing at higher rates.
Final Thoughts
Portability can be a valuable feature for homeowners planning to move before their mortgage term ends. It helps save money on penalties and preserves favorable loan conditions, but borrowers should review the lender’s terms carefully.