Mortgage portability is usually an after thought, but it’s a mistake to not consider it before making a decision
Mortgage shoppers are probably 10 times more likely to ask, “What’s your best rate?” than, “What’s your mortgage portability policy?”
One of the first things mortgage shoppers should do is ask themselves: What’s the probability I won’t be in this home in the next X number of years? Of course, no one can foresee things like an illness or death but job uncertainty and plans to expand a family could factor in. But, getting a quarter-percentage point off your rate on $400,000 only saves you $4,800. So, mathematically, going for that lower rate isn’t worth it based on portability alone. Note: For simplicity in these calculations, I ignore the time value of money – that is, future interest is paid in less valuable dollars.Variables are different Penalties are much less painful on most variable-rate mortgages, typically only 1.5 per cent of the balance or less, based on current rates.
What makes a good portability policy The worst portability policies require you to close your current home’s sale on the same day as your new home purchase, which is quite unlikely. You might as well have no portability options at all. This policy is common with some mortgage finance companies.
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