Can You Port Your Mortgage in Canada?

What Does It Mean to Port a Mortgage?

Sandra is a 36-year-old lawyer living in Guelph, Ontario. She bought her home four years ago on a five-year fixed mortgage at a rate she and her husband Max are happy with. Sandra and Max want to upsize, both have received significant raises at work and have found a property they love.

Their mortgage term does not end for another year. Sandra's friend told her she might be able to port her mortgage to the new property, but she has no idea what that means or whether she can actually do it. She and Max also locked in a good rate four years ago and do not want to lose it.

In the world of mortgages, porting means transferring Sandra's existing mortgage, including her current interest rate and the remaining term, from her current property to a new one she is buying. If Sandra's rate is lower than what is available today, porting lets her keep it.

Is Every Mortgage Portable?

Not every mortgage is portable. Portability is a feature that some lenders offer and others do not. Even lenders that offer it may attach conditions: a minimum credit score, restrictions on property type, or a requirement that the new property be in the same province.

Sandra needs to read her mortgage agreement carefully and confirm any conditions she is unsure about directly with her lender.

How Does the Timing Work?

Mortgage portability usually comes with a time condition. Most lenders require Sandra and Max to close on their new property within 30 to 120 days of selling their current one. If they miss that window, they may lose the ability to port.

Upsizing while still mid-term on a mortgage means coordinating the sale and purchase carefully. Planning ahead and knowing the exact conditions in the mortgage agreement is essential.

What If the New Home Costs More?

The new home Sandra is looking at costs more than the current balance on her mortgage. In this case, she would port her existing mortgage and top up the difference with a new mortgage at the current rate. This is called a blend-and-extend or a port-and-increase, depending on the lender.

The blended rate Sandra ends up with sits somewhere between her original locked-in rate and today's rate.

What If the New Home Costs Less?

If Sandra and Max were to downsize to a home cheaper than their current one, they may not be able to port the full original mortgage amount. The lender may require them to pay down the difference, which could trigger a partial prepayment penalty depending on the conditions in their agreement.

When Does Porting Make Sense?

Porting makes most sense when Sandra's current rate is better than what is available today, and when the timing of her sale and purchase lines up with the lender's porting window. It is less useful if rates have dropped since she locked in. In that situation, breaking the mortgage and taking a new one at the lower rate might actually be cheaper, even after the prepayment penalty.

When to Talk to a Mortgage Broker

A broker can pull Sandra's exact portability conditions from her current lender and model whether porting or breaking makes more financial sense given her and Max's situation. A broker can also help coordinate the timing of the sale and purchase.

Sandra and Max's situation involves variables too specific to their finances for generic advice. That is what a broker can provide.