Is a portable mortgage any good....we want to move soon?

Question

We are planning on selling our house really soon, but want to consolidate our debt. Is it better to role into a new portable mortgage or a line of credit. There is only six months left on our mortgage term. we will be moving as soon as our house sells which could be two weeks to months. The house we will be buying will be about $200 000 more than we owe now.

Any information would be greatly appreciated.

Answer 1

When you roll the existing mortgage to a new house the dates of the sale or your existing house and the purchase of your new house have to coincide. You may be able to bridge it if the dates are within a couple of weeks though.

Since you will purchasing a home that is $200,000 more than you owe right now you will likely have to get a new mortgage anyway. Pay off the existing mortgage when you sell your house. You could add the amount of debt you owe to the new mortgage to consolidate it into one payment.

I can't see a benefit to having two mortgages because your existing one won't cover the cost of the new house. I think it would be a good idea for you to talk to a mortgage broker about a new mortgage. Using a broker you're likely to get a better rate because they have access to so many different products and companies.

If you can't incorporate your debt into the mortgage then a line of credit would be a good alternative since the interest rate you'd pay would be considerably less than a conventional loan.

Portable mortages are fine if you don't plan on staying in a home for the long haul. The problem with them is that unless you have the cash to top the actual mortgage amount when you transfer it's not of much help.

Good Luck

Answer 2

I've been in the real estate/mortgage industry for 20 years, and I've never heard of a portable mortgage.  Is that something you've heard of or seen advertised, or are you kind of looking for something that may not exist?

There are things called wrap around mortgages that might encompass two properties, but they're not common, and can be a pain.  There are also bridge loans, but again, they're not common and hard to find.

I'd pay off that house completely, then sell the house.  The market could be better or worse in 6 months, but that's always the case.  It will probably take at least that long or longer to sell the house.

If you really want a loan on the house, get it before you list it.  The lender still has to pay their processors, the appraiser, the flood certifier, the surveyor, and the title company whether you actually close on the loan or not, so we try to limit the possibility that we're wasting our time and money on a house that may be sold before we're ready to fund.