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What Is a Relocation Mortgage?

Esther Ejim
Updated May 16, 2024
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As part of the globalization drive, or merely a need to expand, some companies establish subsidiaries or branches in other countries or even another state within the same country. When such a situation occurs, the company might need to transfer some of its already tried and tested experienced workers to serve as part of the foundation for the new subsidiary or branch. Where this is the case, the company might offer a relocation mortgage to any affected employee as part of the effort to make the move more attractive to such a person. This is due to many factors that include a reluctance by some employees to leave an area after they might have established themselves there and also due to the costs associated with buying a new home in the new location. This type of mortgage serves the purpose of reducing the financial burden associated with buying a new home by specifically provided some assistance to the employee in the form of the payment for the closing costs of the new house.

Some companies might have their choice of lenders with whom they might have dealt in the past regarding such issues, or they might leave the choice of a lender up to the employee. Finding a lender to engage in a relocation mortgage is not that hard due to the fact that some lenders specialize in the provision of such services. A relocation mortgage is attractive to such lenders since they know that they are dealing with companies that have the resources to settle the accruing debts in a more timely fashion than some individuals can manage.

What usually happens under the mortgage arrangement is that the lender will calculate the closing costs for the mortgage of the home in the new location with a view to sending a bill to the company, rather than expecting the employee to pay such costs. Another advantage that is attached to the mortgage arrangement is the fact that it does not require as much scrutiny as other forms individual mortgage, reducing the length of the process and also reducing the paperwork associated with the process of obtaining the mortgage. The money saved from the process of the relocation mortgage can be used by the employee for other purposes not related to the mortgage.

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.
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Esther Ejim
By Esther Ejim
Esther Ejim, a visionary leader and humanitarian, uses her writing to promote positive change. As the founder and executive director of a charitable organization, she actively encourages the well-being of vulnerable populations through her compelling storytelling. Esther's writing draws from her diverse leadership roles, business experiences, and educational background, helping her to create impactful content.
Discussion Comments
By Markerrag — On Oct 02, 2014

@Terrificli -- A much more common occurrence if for a company to move facilities from one area to another and offer employees the chance to move along with the new facility. That is a great public relations move, but company officials often know that employees won't take on the cost and inconvenience of moving from one town to another. Those companies know that they can fill jobs in the new facility in the new town with no problem due to the high unemployment rate.

On the other hand, there are some employees that are considered so valuable that they can secure relocation mortgages and/or expenses. Those are usually upper management types, but companies are even starting to look at the bottom line and refuse to offer those relocation costs to all but the most valuable employees.

By Terrificli — On Oct 01, 2014

It seems these used to be a lot more common. With the unemployment rate so high, it is much easier for a company to find new employees in an area rather than paying to send current ones to new locations.

That can sometimes result in job losses as positions move from one city to another, but that is just a sign of the times.

Esther Ejim
Esther Ejim
Esther Ejim, a visionary leader and humanitarian, uses her writing to promote positive change. As the founder and...
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