Business & Finance mortgage

Some Basics of Portable Mortgage

A mortgage allows you to buy a house by pledging an asset for collateral. Now if you are buying a house which you plan on staying for long term, then a fixed rate mortgage is the perfect option for you.

What are portable mortgages?

A mortgage loan usually could be taken for long terms wherein loan could be repaid completely in a period of 30 years. But what if you are the type of person who is always on the go? The one who likes moving to different places after staying at a place for say a year or two?

An invest like this is the perfect solution for you. It is tailor made for your relocating demands. Instead of paying off the current loan after selling your house and applying for a new one every time you change houses, you can make use of one portable loan for many houses until the life of the loan is complete.

Why portable mortgages?

Portable mortgages have many benefits you can avail. Market rates of interest keep changing everyday. They are dependent on the changes in an economy. Therefore your portable loan can be used as a hedging technique wherein you can mitigate the risk of changing interest rates. Portable mortgages can have lock in interest rates which means that you are supposed to pay a pre determined fixed rate of interest over the life of your loan.

Another advantage of these is that the closing charges you had to pay once the loan is completed can be saved on many mortgages. You can pay a one time closing charge on a portable mortgage.

Eligibility for portable mortgages

Although there are no strict rules with regard to applying for a portable mortgage, there are some requirements you may have to fulfill. Portable mortgages require having a good credit history. You will be moving to different places over the period of the mortgage and therefore for a lender to trust you, he will need to know that you can be trusted with the repayment. That is why your credit history is considered important here.

To be able to qualify for these loans, generally you will have to make sure that you have stable income to repay according to the terms. If you have more debts than your income, a lender may not be pleased. Therefore you should make sure that you understand their terms and conditions right.

Additional notes

If you are planning on buying a house within next few years, there are very meager charges you may have to pay towards your portable mortgage when you make a move. But if you are going to change a house say after 6 or 7 years, the charges are a bit more. Also if you are planning on moving to a house whose value is lesser or equal to the value of your current house, the portable mortgage remains the same. But if you are planning to move on to an expensive house, it might charge you more.

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