Jason Peatz – Mortgage Associate

Portability – What is it? And how can it benefit you?

November 18, 2009 2:28 pm Jason Book, First Time Home Buyer, Interest Rates

Most mortgages that people get are closed. See my post describing Open vs Closed here.  Closed mortgages typically have lower rates because the lender knows the term of the mortgage (and therefore their revenue).  But closed mortgages have penalties associated with them when people do not carry though until the end of the term.

So for example if you get a 5 year fixed closed mortgage and decided to move to another house 3 years later then you would be forced to end your mortgage and pay the penalty fee.

But portability is an option in most mortgages of this type.

So in this example you may be better off to port your mortgage to the new property.  This means that you would not have to pay the penalty and you would get to keep the rate that you had for the past three years.  If further money was needed you would borrow that amount at the rates of that time.  These two amounts and their rates would be blended into one convenient payment.

So by using this option people can really save themselves lots of money and get the home they want.