Portable vs. Assumable

Having a mortgage that is able to be transferred to another property (portable) or another person (assumable) allows you some flexibility should you plan or need to move during the term of the mortgage. If you sell your home before the term is over and you do not have either of these options then you will be required to pay the prepayment penalty outlined in your commitment from the lender.

Portable allows you to transfer your current mortgage balance (at the existing rate and term) to a new home if you sell your existing home. The lender will require that you still qualify for the mortgage and that the new property meets their requirements. The new home must close within a specified time from the sale of the existing home, if closing is longer than specified you would be subject to the prepayment privileges outlined in your commitment.

Assumable means that subject to approval a buyer of your home could take over the mortgage. This can be attractive to buyers if mortgage rates have increased recently and you have a lower fixed rate locked in for the term of your mortgage.

Many no frills mortgages have incredibly low interest rates but fail to provide these options to their clients. If you sell your home and do not have one of these options in your mortgage fine print then you will be required to pay the mortgage prepayment penalty outlined by your lender