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Mortgage Portability

3d illustration: A group of trunks

A portable mortgage is a home loan that permits the borrower to transfer their loan balance to a new property with the same lender without penalties. The borrower will transfer the mortgage to the new property with the exact terms that remained at the time of the transfer.

Previously, and still the case with many current mortgage products and providers, each new home needed a new mortgage. So, if a person was going to change house then they would pay out their current mortgage when they sold their house and at the same time they would arrange a new mortgage for their new house.

This process means that the fees that would be incurred when arranging a new mortgage would have to be counted into the cost of moving house. This could include set up fees, valuation fees and other one off fees or services that was insisted on by the mortgage provider.

A portable mortgage has several advantages for the right homeowners. If a homeowner has locked in to a low rate for example, but then has either the need or the desire to purchase another home, the low interest rate is retained.

In addition, many of the previously mentioned costs associated with obtaining a new mortgage might not be charged. However, the borrower should expect an appraisal fee for the new property, as the mortgage lender must be assured that the loan-to-value ratio meets their requirements.

There are certain types of home loans that mortgage portability tends to be available. These include flexible mortgages and mortgages available to people with a large amount of equity. Many portable mortgages also have the ability to increase the mortgage if the price of the new home is for more than the loan amount.

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