Life happens. You get a new job in a different city, your family grows and you need more space, or you decide it’s time to downsize. For homeowners in Ontario, moving often brings up a pressing financial question: What do I do about my mortgage? This is especially true if you have a fantastic low-interest rate locked in for a term that is years away from ending. The fear of incurring massive mortgage penalty fees can be a significant source of stress.

Fortunately, there is a powerful feature built into many Canadian mortgages designed for this exact situation: portability. Porting your mortgage allows you to effectively “pack up” your existing mortgage and take it with you to your new property. It can be a financial lifesaver, but it’s a process with specific rules and requirements that every homeowner should understand before putting a “For Sale” sign on their lawn.

What is Mortgage Porting?

Mortgage porting is the process of transferring your existing mortgage—including its current interest rate, remaining term, and all associated conditions—from your current home to a new one. Instead of breaking your mortgage contract and starting from scratch, you are essentially moving the loan from one property to another.

It’s important to know that this is a feature, not a right. Your mortgage contract must explicitly state that it is “portable.” While most closed mortgages from major lenders include this option, it’s crucial to confirm this by reviewing your original mortgage documents or speaking with your lender. An open mortgage doesn’t need this feature, as it can be paid off at any time without penalty.

The Two Main Benefits of Porting a Mortgage

Homeowners choose to port their mortgage for two primary, money-saving reasons:

  1. To Avoid Prepayment Penalties: This is the number one driver. Breaking a closed mortgage, particularly a fixed-rate mortgage, before the end of your term can trigger an Interest Rate Differential (IRD) penalty, which can easily amount to thousands, or even tens of thousands, of dollars. Porting your mortgage allows you to avoid this penalty entirely.
  2. To Keep a Favourable Interest Rate: If you were fortunate enough to secure a mortgage when rates were low, and current market rates are now significantly higher, porting is a huge advantage. It allows you to hold onto your coveted low rate for the remainder of your term, saving you a substantial amount in interest payments on your new home.

How the Porting Process Works

The mechanics of porting depend on the price of your new home compared to your old one. There are generally two scenarios:

Scenario 1: Moving to a Home of Equal or Lesser Value (A “Straight Port”)

If the mortgage amount you need for your new home is the same as or less than your current mortgage balance, the process is relatively simple. You transfer the existing mortgage amount and terms to the new property. If you need a smaller loan for the new home, you will have to pay down the difference, and your lender may charge you a prepayment penalty on that specific portion of the mortgage that you no longer need.

Scenario 2: Moving to a More Expensive Home (A “Port and Increase”)

This is the most common situation for growing families. You need a larger mortgage to afford the new, more expensive property. The process looks like this:

  • You port your existing mortgage balance at its fantastic low rate.
  • You borrow the additional funds needed at the lender’s current market interest rates.
  • The lender will then typically create a “blended” rate. They calculate a new, single interest rate that is a weighted average of your old, low rate on the ported amount and the new, higher rate on the additional funds. You then pay this new blended rate for the remainder of your original term.

The Crucial Catch: You Must Re-Qualify

Here is the most critical point that many homeowners miss: porting a mortgage is not automatic. You must apply to your lender and be re-approved for the mortgage on the new property.

The lender will treat it like a new application. They will reassess your entire financial profile to ensure you still meet their lending criteria. This means they will:

  • Verify your current income.
  • Check your up-to-date credit score.
  • Analyze your current debt load.
  • Require that the new property meets their standards.
  • Make you pass the federal mortgage stress test at the current qualifying rate.

If your financial situation has changed for the worse since you first got your mortgage—for example, you took on a significant car loan, or your income decreased—you risk not being approved for the port.

The Timing Challenge and Bridge Financing

Most lenders have a specific window of time in which a port must be completed, typically ranging from 30 to 120 days between the closing date of your old home’s sale and your new home’s purchase.

What happens if you buy your new home before you sell your old one? This is where bridge financing comes in. A bridge loan is a short-term loan that covers the down payment on your new home, using the equity from your current home as security. Once your old home sells, you pay back the bridge loan. It “bridges” the financial gap, allowing the porting process to proceed smoothly even if the closing dates don’t line up perfectly.

When Does Porting Make the Most Sense?

Deciding whether to port is a mathematical and strategic exercise.

Porting is generally a great idea when:

  • Current interest rates are higher than your existing mortgage rate.
  • The penalty to break your mortgage is substantial.
  • You are satisfied with your current lender and mortgage features.

Porting may NOT be the best choice when:

  • Current interest rates are lower than your rate. It might be cheaper to pay the penalty and secure a new mortgage at a significantly lower rate. You must calculate the break-even point.
  • The blended rate your lender offers is not competitive compared to what new lenders are offering on the open market.
  • Your existing mortgage has restrictive features, and you want a more flexible product.

Mortgage portability is one of the most valuable features for a homeowner in a dynamic province like Ontario. It provides the flexibility to move without having to abandon a great interest rate or pay crippling penalties.

The key to a successful port is proactive planning. As soon as you begin thinking about moving, your first step should be to contact your lender or a mortgage broker. Confirm that your mortgage is portable, understand the specific terms and timeline, and get a clear picture of the re-qualification process. By understanding your options early, you can navigate your move with confidence, ensuring your mortgage works for you, wherever life takes you next.