Porting a mortgage in Canada: how to keep your rate when you move
Short answer: porting lets you take your existing mortgage balance, interest rate and terms to your new home when you sell and buy. That saves you from breaking your contract, which usually costs the higher of three months' interest or the interest rate differential. Not every mortgage is portable, and if your new home costs less than your mortgage, you may still pay a penalty on the difference.
Port vs break calculator
What does porting save you?
| Option, over months left | Monthly payment | Interest + penalty |
|---|
Penalty estimate follows the FCAC example: the higher of 3 months' interest or a simple IRD (balance × rate gap × months left ÷ 12). When you need less, assumes the penalty applies only to the paydown. If you need more money, the ported rate is a weighted average of your rate and today's rate, an estimate only; lenders set their own method. Payments use semi-annual compounding. Excludes legal, appraisal and admin fees.
How porting a mortgage works
The FCAC describes a portable mortgage simply: if you sell your home to buy another one, it lets you transfer your existing mortgage, including the balance, interest rate and terms and conditions. It lists two reasons people port: the existing mortgage has favourable features, and they want to avoid prepayment penalties for breaking early.
Why that matters: a closed mortgage is a contract for a set term. Paying it off when you sell counts as breaking it. The FCAC lists paying back your entire mortgage before the end of the term, "including when you sell your home", as one of the triggers for a prepayment penalty, and says penalties can cost thousands of dollars. Porting is one of the FCAC's own tips to avoid that cost.
Three situations come up when you port:
- Same amount: the new home needs about the same mortgage. You carry over the balance and rate, and keep the same renewal date.
- You need more: the new home is pricier. You port the existing balance and borrow the extra. The FCAC says to ask your lender for details. Ask how the new money is priced, since your overall rate may become a mix of old and new.
- You need less: the new home is cheaper. The FCAC says you may pay a prepayment penalty, because part of the balance is being paid off early.
Worked examples: Sam and Leah move
Sam is moving up. He owes $300,000 at 4.2% with 30 months left on a five-year term and 25 years of amortization. His lender's rate for a similar term today is 3.9%. The new house needs a $400,000 mortgage.
- Penalty to break: three months' interest is $300,000 × 4.2% ÷ 4 = $3,150. A simple IRD is $300,000 × 0.3% × 30 ÷ 12 = $2,250. The higher amount: $3,150.
- Port and borrow $100,000 more: assuming the lender prices the new money at 3.9% and blends by amount, the rate is ($300,000 × 4.2% + $100,000 × 3.9%) ÷ $400,000 = 4.125%. Payment: $2,131.27 a month. Interest over 30 months: about $39,724.
- Break and take 3.9% on $400,000: payment $2,082.45. Interest over 30 months: about $37,541, plus the $3,150 penalty = $40,691.
Porting comes out about $966 ahead over the 30 months, before legal and admin fees. The rate gap here is small, so the penalty decides it. If today's rate were much lower than Sam's, the IRD would grow and breaking would cost more, but the cheaper new rate would also save more. That trade is why the calculator above compares both.
Leah is downsizing. Same $300,000 at 4.2%, 30 months left, but her new condo needs only a $250,000 mortgage. She ports $250,000 and pays down $50,000 from the sale. If her lender charges the penalty only on that $50,000, the same approach gives: three months' interest is $50,000 × 4.2% ÷ 4 = $525, versus a simple IRD of $375. Estimated penalty: $525, compared with $3,150 to break the whole mortgage. Her prepayment privilege may cover part of that $50,000 penalty-free; our prepayment privileges guide shows how to check.
Buying cheaper or with a gap between homes
The FCAC is direct: if your new home costs less than the amount of your mortgage, you may pay a prepayment penalty. Before you list, ask your lender two things: whether your prepayment privilege can be applied to the paydown first, and what the penalty would be on the remaining difference.
Timing is the other trap. Porting depends on your lender's conditions, and the FCAC says to ask about any restrictions that may apply. Ask specifically how long you have between selling and buying, and what happens if your purchase closes after your sale. Get the answer in writing before you sign either deal.
If your new purchase needs a bigger loan, ask your lender what it needs from you to approve the extra amount, and prepare like a new buyer: see how much down payment you need and keep your credit clean in the months before you move.
Questions to ask your lender before you list
- Is my mortgage portable, and what restrictions apply?
- How long do I have between selling and buying to port?
- If I borrow more, how will you set the rate on the combined mortgage?
- If I need less, what will the penalty be on the difference, and can I use my prepayment privilege first?
- What would it cost to break instead? Banks have penalty calculators on their websites. Our mortgage penalty guide explains the IRD.
- What fees apply to porting: admin, appraisal, legal, discharge?
Your options when you move, side by side
| Option | Penalty | When it fits |
|---|---|---|
| Port the mortgage | None, or only on a paydown | Your rate is good and the contract is portable. |
| Break and get a new mortgage | Higher of 3 months' interest or IRD | Today's rates are much lower, or you want a different lender. |
| Let a buyer assume it | Lender fee may apply | Fixed-rate, buyer approved by lender; check if you stay liable in your province. |
| Time the move with renewal | None at renewal | Your term ends close to your move date. |
Close to renewal anyway? The mortgage renewal guide covers your options, and blend and extend explains the early renewal route if you are staying put. Every calculator is on the tools page.
Questions people ask
What does porting a mortgage mean in Canada?
Porting means transferring your existing mortgage to a new home when you sell and buy. The FCAC describes it as taking your mortgage balance, interest rate and terms and conditions with you, so you avoid breaking your contract and paying a prepayment penalty.
Is every mortgage portable?
No. The FCAC says to check with your lender to see if your mortgage is eligible for porting and to ask about any restrictions. Your mortgage contract states whether it is portable.
What happens if my new home is cheaper than my mortgage?
If your new home costs less than the amount of your mortgage, the FCAC says you may pay a prepayment penalty. Ask your lender whether the penalty applies only to the part you pay down.
What if I need to borrow more for the new home?
Ask your lender for details, as the FCAC advises. Ask how the extra money will be priced, because your overall rate may become a mix of your ported rate and a current rate. The method and approval terms are set by your lender.
Is porting the same as an assumable mortgage?
No. Porting moves your mortgage to your new home. An assumable mortgage lets a buyer take over your mortgage and your property, with the lender's approval. The FCAC notes the seller may stay liable in some provinces.
How much is the penalty if I break instead of porting?
The FCAC says a prepayment penalty is usually the higher of three months' interest or the interest rate differential (IRD). On its example of a $200,000 balance at 6% with 36 months left and a 4% current rate, the penalty is $12,000.
Looni's mortgage calculators let you compare porting, breaking and waiting with your own balance and rate, and the countdown keeps your term end in view. Read-only, no advice.
Sources
Financial Consumer Agency of Canada, Choosing a mortgage that is right for you (portable mortgages: balance, rate and terms; check eligibility and restrictions; penalty if the new home costs less; assumable mortgages and seller liability), Mortgage fees: Prepayment penalties (penalty triggers including selling, 3 months' interest or IRD, the $12,000 example, porting as a way to avoid penalties) and Breaking your mortgage contract (fees when breaking). Payment figures computed by Looni with semi-annual compounding.