What is a Portable Mortgage?
As the name indicates, a Portable Mortgage is mortgage than can be moved from one property to another. This means that if you need to move from one home to another, such as in the case of you wanting a bigger house to start a family, you will be able to transfer the mortgage from your old property to the new one. This will save you a lot of bother and will not require you taking out a new one on the old home while trying to pay off the old.
What Can a Portable Mortgage Do for You?
One of the most obvious reasons why you may want a portable mortgage on your home is that it will allow you to shift the mortgage from one property to another. This will come in handy if your job requires you to move a lot or if you are moving to another town.
Another reason is that it eliminates all the cost that you are sure to incur if you mortgage is not portable, thereby requiring you to seek out a completely new mortgage on your new home.
Also, since the Portable Mortgage interest rates are usually set to be 2% to 4% higher than the rates you have paid on your loan before opting to move, you may end up saving money if the market interest rates increase in the interim between the purchase of your first house and the second.
What to Watch out for When Taking up a Portable Mortgage
There are various factors that you should watch out for while taking up a portable mortgage. The first is the fine print and the terms and conditions which you will need to go through carefully before you get into it.
Before getting into a portable mortgage, you will need to know the exact criteria for your mortgage’s portability as well as the back of your hand. You will also need to know what factors can disqualify you from being allowed portability. Do not fail to get this in writing on your contact for your benefit as it is vital information.
Another factor you will need to consider is a possible time limit on moving the mortgage from one property to another. You will also have to avoid messing up your equity during your mortgage period as this can affect the portability of your mortgage.
Two others factors that you will need to consider are the value of your old property vs. the mortgage value and the value of your new property vs. the mortgage. If your new home is worth less than your mortgage, your lender has the right to refuse to port your loan. Similarly, if the current value of your old home has dropped bringing it well below the value of your mortgage your application to move your loan could be refused.
Your mortgage provider can also refuse to port your loan, if their company does not approve of the new home you have chosen. Banks will consider your new home in the light of an asset and estimate its worth. You current financial status, equity and income can also come under the microscope when you decide to move mortgages.