Portable mortgages are a type of loan feature that lets a borrower move an existing mortgage balance to a new property, often preserving the current interest rate and remaining term, rather than paying off the old loan and taking out a new one. They are more common in some markets (like Canada and the UK) and are less widely available or differently structured in others (notably the United States). Here’s a concise guide to what they are, how they work, and key considerations. What a portable mortgage typically means

• You can transfer your current loan to a new property with the same lender, often keeping the existing interest rate and remaining term intact.
• You may avoid some costs associated with new mortgages, such as originations fees, but you might still face closing costs, appraisal fees, and potential adjustments to the loan-to-value on the new property.
• The move usually requires selling the old home and purchasing a new one within a window that makes the porting possible, and you may need to re-qualify under the lender’s rules for the new property.

How portable compares to other options

• Portable vs. assumable mortgages: A portable mortgage transfers the loan itself to the new property (you remain the borrower), whereas an assumable mortgage transfers the obligation to the new buyer under its existing terms. With an assumption, the buyer takes over the loan; with portability, you continue the same loan on the new property.
• Portable vs. traditional new mortgage: A traditional approach requires paying off the old loan and taking a new loan at current rates and terms. Porting can preserve a favorable rate and avoid prepayment penalties, but may still require qualification and sometimes processing fees.

Benefits and drawbacks

• Potential benefits: Retaining a low rate, avoiding some prepayment penalties, reduced upfront costs compared with taking a new loan, quicker close if the lender’s porting process is straightforward.
• Potential drawbacks: Limited availability depending on lender and market, possible fees to transfer, possible re-qualification requirements, potential need to bridge any gap between the old loan balance and the new purchase price with a down payment or secondary financing, and tax implications can vary by jurisdiction.

Practical considerations

• Availability: Portability features are more common in some countries and in specific loan programs. It’s important to check with your lender about whether portability is offered, and under what terms.
• Timing: Porting typically requires coordinating the sale of the current home with the purchase of the new home within a timeframe that works with the lender’s policies.
• Fees and terms: Ask about any transfer fees, whether the interest rate remains fixed or can adjust, whether the remaining amortization schedule carries over, and what happens if the new property has a different loan-to-value ratio.

Bottom line

• A portable mortgage can be advantageous for homeowners who want to move without incurring a full new financing, especially if their current rate is favorable. However, its availability and exact mechanics depend on the lender and the country. If considering a move, discuss portability options with your lender and compare them against the cost and certainty of obtaining a new loan at prevailing rates.