Answers to 4 Common Questions About Portable Mortgages

With today’s high mortgage rates, some homeowners are second-guessing any plans to move.

This is especially true for those who have a great rate on their existing mortgage and a few years left on the term. Giving up your affordable monthly payment for the higher rate that comes with a new mortgage may not be worth it.

What some people don’t realize is that in Canada, some mortgages are portable, meaning you can take an existing loan and apply it to a new home purchase.

What does ‘porting a mortgage’ mean?

Porting your mortgage is a process through which your existing mortgage — with its current interest rate and terms — is transferred to a new home. This can help you avoid the shock of current interest rates, which are at their highest point in years.

Porting can only be done if the terms of your mortgage include a portability clause, and you’re buying a new home and selling the old one.

Common questions about porting a mortgage

Porting a mortgage can be a good idea in the right situation, but many homeowners have some questions before they commit to the strategy. Here are some answers that might help.

Do I need a down payment when porting a mortgage?

Maybe. Whether a down payment is needed depends on the value of the home that you’re buying and how much equity you have in your current home.

Home equity can count as your down payment, as long as it meets Canada’s minimum down payment thresholds. If this is the case, an additional down payment would not be required. However, if you’re upgrading to a more expensive home, your equity might not be sufficient. In this scenario, you’d have to make up the difference with a lump sum payment.

Can I port a mortgage from one province to another?

Yes. If your current lender operates in the province you’re moving to, you should be able to port your mortgage to the new location. Porting to a new province typically isn’t a problem if your mortgage is with one of the Big Six banks, but alternative and private lenders may offer less flexibility

If you’re considering porting your mortgage, speak to your lender or mortgage broker early in the process to learn what’s possible and how it will work.

Can I port my mortgage to a more expensive property?

Yes. Assuming your current mortgage is portable, then it’s possible to transfer your mortgage to a more expensive property. That said, there are still some considerations. You must still meet the minimum down payment requirement — either with equity or cash.

If the new home requires you to borrow more money, you could get a blend and extend mortgage, which combines your old mortgage rate with current rates. This may allow you to avoid any prepayment charges since you’re not breaking your mortgage. Overall, the savings could be significant.

Also, since you’ll need to borrow more money, you must meet any debt service ratio requirements your lender has and you need to pass the mortgage stress test.

Is porting a mortgage worth it?

If you secured a fixed-rate mortgage before interest rates started to climb, and have a few years left on your term, porting your mortgage will likely be a money-saving move. Even if you need to borrow more money, your old mortgage can help you since it’ll allow you to blend it into a new mortgage with a lower interest rate than what the market is currently offering. Plus, since you’re not getting rid of your old mortgage, there’ll be no prepayment penalties to worry about.

Next steps if you want to port your mortgage

Speak to your lender or mortgage broker immediately so you know what your porting options are, and any conditions you’ll have to meet. For example, some lenders have a limit of 120 days for you to port your mortgage to a new home, but it could be as few as 30 days.
Figure out how much home equity you have by subtracting your remaining loan amount from the house’s current market value. A local real estate agent can help you determine what your home might sell for, if you’re unsure.
Use a mortgage affordability calculator to get a rough idea of how much you can spend on a new property.