First, if make a reservation for my home property at the 11 month mark, then at the 7 month mark I see that the resort I would prefer to stay at is available, could I cancel my existing reservation at the home property without penalty?
sure. many people do this.
you are only penalized in 3 situations
1) canceling within 30 days of your reservation - the points turn into "holding" pts and become more difficult to use, and
2) canceling after your banking window has closed - which is why it is better to travel early in your UY. (example: i have an oct UY and like to travel in nov and dec - that works out great since my banking window does not close till may 31 of the next calendar year.)
3) canceling the day of the reservation - which forfeits all pts used in that reservation
(there might be some risk that after you cancel your original reservation, someone books up the last villa that you intended to book - a few people have run into that sort of issue. some MS operators have the ability to hold a room while canceling the original reservation but some do not. and at last check, if you are booking online, you cannot hold the new reservation. but if it is that close, you will probably have success if you get on the waitlist exactly 7 months out.)
also, remember that you can only bank or borrow pts one time. so if the new reservation uses fewer pts than the old one did, any banked or borrowed pts that are freed up will be stuck in that UY and expire at the end of that UY.
Also, if I add on at the same property but have a different use year, will I be able to combine points for a single reservation? Ie transfer points from one contract to another? What are the rules regarding that?
you would have to use up your once-per-year transfer for both contracts* and you would not have the option of using borrowed pts from the other contract (as borrowed pts cannot be transferred and transferred pts cannot be borrowed).
you cannot transfer banked pts either - only current pts may be transferred.
after you have transferred the current pts, you do have the option of banking those transferred pts or using them in their transferred UY.
transferred pts retain their original UY (and original home resort window in the case of different home resort pts).
*note that some accounts suggest MS doesn't count transfers to yourself against you, but generally, you can transfer pts one time per UY, either in or out but not both - and some members have confirmed that transferring pts between their contracts uses up their transfer option for that UY for both contracts.
