We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What Is a Portable Mortgage?

By Theresa Miles
Updated May 16, 2024
Our promise to you
SmartCapitalMind is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At SmartCapitalMind, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

A portable mortgage is a loan to purchase residential real estate that attaches to the borrower rather than to the property. Borrowers can transfer it to another house without having to apply for a new loan or incur additional fees. The terms of the mortgage stay the same despite the property transfer, providing an additional benefit to the borrower if interest rates are higher at the time of the transfer than they were when he purchased the first house.

Real property financing is specific to each country. The concept of a mortgage being “portable” has a somewhat different applicability in the jurisdictions that allow the practice. In the US, for example, a portable mortgage is a special type of loan that allows a borrower to pay a premium to be able to exercise an option at his discretion. Most mortgages in the UK contain provisions that allow the loan to be ported to another property under the same terms, but the buyer does not have an option that he can exercise. Lenders in the UK have discretion to allow a transfer under the same terms or not.

Portable mortgages are rare in the US, though they have been offered sporadically by banks, credit unions, and Internet-based brokers since 1987. Less than a handful of lenders in the entire country offer this type of mortgage at any given time. A portable mortgage is designed with a fixed term and interest rate. The interest rate will be up to a half percentage point higher than the rate of a conventional mortgage. This rate premium pays for the borrower's option to transfer the mortgage to a new house under the existing terms.

There are certain restrictions typically attached to the option. If a borrower is behind on loan payments or in bankruptcy, he cannot exercise it. The mortgage can only be transferred once and only to another single family home that will serve as the borrower's permanent residence. Borrowers cannot increase the amount of the loan, so if the new house is more expensive than the old house, the borrower has to make up the difference or obtain a second mortgage.

A portable mortgage can be beneficial under limited circumstances. If a borrower thinks he will want to buy a new house within a few years of purchasing the first, a portable mortgage may make sense but only if the interest rates on a conventional 30-year mortgage are expected to go up significantly in the future. The borrower is paying an interest rate premium every year for the benefit of making a one-time transfer. At a certain point, the cost of the additional interest will overtake what it would have cost to simply acquire a new mortgage for the second property. If the interest rates rise above the fixed rate of the loan, that differential ceases to matter.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Discussion Comments
SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.