A portable mortgage is a mortgage that permits the mortgage borrower to transfer their mortgage balance to a new property and with the same lender without penalties. The mortgage is transferred to the new property with the exact terms that remained at the time of the transfer.
A portable mortgage feature has several advantages for the right homeowners. If you have locked in a low rate when mortgage rates are low, but then you need or want to purchase another home, the low interest rate is retained. However, prepayment penalties can be severe, up to 3 monthly payments or the cost of increased interest in the remaining term of the mortgage. These amounts can equal several thousands of dollars.
Many of the costs associated with obtaining a new mortgage might not be charged. However, you may need to pay an appraisal fee for the new property, as your lender must be assured that the loan-to-value ratio meets their requirements.
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