Search
  1. Home
  2. Mortgages
  3. How Porting or Transferring Your Mortgage Works
Published August 3, 2021

How Porting or Transferring Your Mortgage Works

Porting, or transferring, your mortgage allows you to take your existing mortgage to a new home.

If you currently own and you’re looking to move, you might be wondering what happens to your mortgage when you sell. Depending on your current mortgage terms, you may be able to port it to your new home. This is sometimes referred to as transferring your mortgage, and it can be quite handy.

What a ported mortgage is

Porting your mortgage is when you take your existing mortgage and transfer it to another property.

All of the current mortgage terms and conditions, including your interest rate and prepayment benefits, carry over. This can be beneficial for anyone who is purchasing a new property and selling their old one, especially if current interest rates are higher than when you negotiated your existing mortgage.

If you end up buying a home that requires a bigger mortgage than what you currently have, then your lender may allow you to blend and extend a ported mortgage. Since you’re not breaking your initial mortgage, there’s no penalty to be paid. That said, if you’re moving to a home that has a lower value than your current mortgage, a prepayment fee may apply on the ported mortgage.

Can you port any mortgage?

It really comes down to the terms and conditions within your current mortgage contract. Many lenders allow you to port your mortgage, but not all do. Porting can also only be done if you’re buying a new property and selling your old one.

Generally speaking, fixed-rate mortgages can be ported, while most variable-rate mortgages cannot be ported unless you convert to a fixed-rate first.

If you’re upsizing to a bigger home and require access to a larger mortgage, then your lender will need to requalify you based on your current income, assets and debt load. If you meet their criteria, then it should be no problem to port things over. If, however, they’re worried about your debt load or your new home’s property value, they may not extend you the full amount that you need.

You're five minutes away from the best mortgage

Explore mortgage quotes with Homewise

Pros and cons of porting a mortgage

Many homeowners buying a new home and selling their old one often assume that porting their mortgage is the best route to go. While that’s true in some cases, it may not always be beneficial. Here are the pros and cons of porting a mortgage.

Pros

  • Favourable terms. If your current mortgage has good terms, then you may want to stick with it.
  • Lower monthly fees. Assuming interest rates have gone up since you negotiated your existing mortgage, your payments will be lower than if you break your current mortgage contract and get a new one.
  • No penalty. Since you’ll be transferring your mortgage and not breaking it, you won’t be charged any prepayment fees (unless you are lowering your mortgage balance).

Cons

  • You may not get the lowest rate. Other mortgage providers may have better rates than what your current lender is offering.
  • Limited time. Your lender will only give you between 30 and 120 days to port your mortgage. This may not be enough time to buy a new home and sell your old one.

Is it worth porting your mortgage?

It really comes down to simple math when deciding if you should port your mortgage.

Let’s say the remaining balance on your mortgage is $400,000, and you’re paying a fixed rate of 2%. The new home you purchase is $500,000, and current interest rates are at 3%. That means you need an additional $100,000. If you were to port your mortgage and blend and extend, your interest rate would fall between 2% and 3% on a new term. That’s better than current rates, so you come out ahead.

Your other option is to break your mortgage and pay the penalty fee, which can be substantial with a fixed-rate mortgage, especially if there is considerable time left on the term. You could then go with a different lender, who might have a lower interest rate compared to what you were offered with a blend-and-extend mortgage.

One other alternative is to let your buyer assume your mortgage. This only works if both parties are interested, and your lender approves it. For the buyer, the potential benefit is access to a lower interest rate. As the seller, you’d be off the hook for the mortgage and wouldn’t need to pay any penalty fees because you’re not breaking the contract. (In some provinces, however, the seller may remain personally liable on an assumed mortgage if the buyer misses payments, so be sure to find out what the rules are in your jurisdiction.)

Porting your mortgage can definitely work to your advantage, but sometimes getting a new one makes more financial sense. Speaking to a mortgage broker about your options is a wise idea since these professionals can shop around on your behalf.

Before you sign for your new mortgage, you might want to ensure there is an option to port if you think you may need to move again.

About the Author

Barry Choi
Barry Choi

Barry Choi is a personal finance and travel expert. His website moneywehave.com is one of Canada's most trusted sites when it comes to all things related to money and travel. You can reach him on Twitter: @barrychoi.

DIVE EVEN DEEPER

What Happens If You Break Your Mortgage Contract?

You will face a penalty for breaking your mortgage contract if you refinance before your term ends. The potential benefit may be worthwhile.

What Is Home Equity?

Home equity is the market value of your house minus what you owe on your mortgage. You can leverage it for loans by tapping into a portion.

First-Time Home Buyer Guide

Ready to buy a home? See if you qualify as a first-time home buyer, find government help and get tips for choosing the right mortgage.

How Much Mortgage Can I Afford in Canada?

Can you afford a mortgage? Mortgage affordability can help determine how much you can borrow and the prices you should consider when buying.