Mortgage Portability

Mortgage portability is a feature of some Canadian mortgages that lets you transfer your existing mortgage — its rate, remaining term, and outstanding balance — to a new property when you move, instead of paying the loan out and applying for a brand-new one. The lender simply moves its security from the old home to the new one.

How a port works in practice

Portability is a contractual option, so it appears in your mortgage commitment and is not offered on every product. In a standard port, the sale of your current home and the purchase of the next one are arranged to close around the same date, and the lender takes a new charge on the property you are buying. Typical conditions include:

• Written approval of the new property, which usually has to pass an appraisal.
• The same borrower or borrowers staying on title, with no change to ownership structure.
• A deadline to complete the move — lenders set a window of a few months, so confirm yours.
• The new home being an acceptable property type and location for that lender.

If the new home costs more, many lenders allow a port and increase (sometimes called port and blend): the existing balance keeps its original rate and term, while the additional funds are advanced at current rates. Some lenders may require you to requalify — often under the federal mortgage stress test and OSFI Guideline B-20 underwriting standards — at least for the added amount, and possibly for the whole loan.

Why it matters

Breaking a closed mortgage early normally triggers a prepayment penalty. On a fixed-rate closed mortgage, that penalty is often the greater of three months' interest or the interest rate differential (IRD), and the IRD can be large when your existing rate is well below today's rates. Portability avoids that cost entirely when it applies.

Consider a homeowner partway through a fixed term who sells and buys in the same city. Without portability, discharging the loan early could mean a penalty plus a new mortgage at current rates. With portability and lender approval, the original rate and term continue on the new property.

Limits to keep in mind

• A port is not automatic — it depends on lender approval and the terms of your contract.
• Portability applies only when you buy another home; if you sell and rent, it does not help.
• If the two closings do not line up, bridge financing may be needed to cover the gap.
• On a high-ratio mortgage, ask how the default insurance is handled on the new property.

Compare this with an assumable mortgage, which lets a buyer take over the seller's loan rather than the borrower moving it.