Portability
Definition and meaning of Portability in real estate.
Portability is a mortgage feature that allows a homeowner to transfer their existing home loan, including its current interest rate and terms, from their current property to a new one. This option is common in some countries, but is rarely available in standard US home loans.
In more detail
When a mortgage is portable, the buyer does not need to pay off their old loan and take out a new one at current market rates when they move. This feature is highly valuable when prevailing interest rates have risen above the homeowner's original rate.
While common in Canada and the United Kingdom, most US mortgages contain a due-on-sale clause that prevents portability. Home buyers should check the specific terms of their loan agreement to see if portability is an option.
Key facts
| Category | Mortgages & Financing |
|---|---|
| Watch out for | Due-on-sale clauses that prevent transfers |
| Typical availability | Rare in the United States, common internationally |
| Who benefits | Homeowners moving during periods of rising interest rates |
A homeowner with a low-interest mortgage sells their house and transfers that exact loan and rate to their new home, avoiding the higher interest rates of the current market.
Frequently asked questions
Are most US mortgages portable?
No, the vast majority of mortgages in the United States are not portable because they contain a due-on-sale clause requiring the loan to be repaid when the home is sold.
What is the difference between portability and loan assumption?
Portability allows the seller to move their loan to a new home, whereas assumption allows a buyer to take over the seller's loan on the existing home.