Mortgage Portability

Porting a mortgage means transferring an eligible existing mortgage from the home you are selling to the home you are buying. Depending on your mortgage and lender, this can allow you to keep your existing mortgage balance, interest rate and remaining terms rather than breaking the mortgage and arranging completely new financing.

Portability can be particularly useful if you are moving before your current mortgage term ends and your existing mortgage has favourable terms. Not every mortgage is portable, and each lender can have its own conditions, timing requirements and property guidelines.

If you are thinking about selling a home in Nanaimo, Parksville, Nanoose, Ladysmith, Victoria or elsewhere on Vancouver Island, it is worth checking your mortgage portability options before listing or committing to another property.

Potentially. If you have a closed mortgage and sell your home before the end of the mortgage term, breaking the mortgage can result in a prepayment penalty. Porting an eligible mortgage to your next property may allow you to avoid or reduce that penalty, depending on your lender's rules.

This can be an important reason to investigate portability before paying out an existing mortgage. Mortgage prepayment penalties can be significant, particularly with some fixed-rate mortgages.

Porting can still involve other costs, including legal, registration, appraisal or administrative expenses. Compare the total cost of porting with the cost of breaking the mortgage and arranging new financing before deciding.

Possibly. Some lenders allow borrowers to port their existing mortgage and add additional financing when the new property requires a larger mortgage.

The existing mortgage portion may retain some or all of its current terms, while the additional money may be offered at the lender's current rate. Depending on the lender, the rates may be blended or the financing may be structured another way.

You will need to qualify for the larger mortgage amount, and the new property will also need to meet the lender's requirements. The rate and structure of the additional funds should be compared with the option of arranging an entirely new mortgage.

No. Having a portable mortgage feature does not mean the transfer to a new property is automatically approved.

Your lender may need to review your current income, debts, credit and overall financial situation. The new property must also meet the lender's requirements, and an appraisal may be required.

This becomes especially important if your financial circumstances have changed since you originally received the mortgage or if you need to increase the mortgage amount for the new home.

Before making an offer based on the assumption that your mortgage can be ported, confirm both your mortgage eligibility and the lender's requirements for the replacement property.

Timing can be one of the most important parts of mortgage portability. Lenders generally have specific rules governing how close together the sale of your existing property and the purchase of your new property must occur.

The exact portability window varies by lender and mortgage product, so you should not assume that you can sell your home and purchase another property several months later while automatically keeping the same mortgage.

If you buy your next home before your current home sells, you may also need to discuss whether temporary financing is required to cover the gap between the two closing dates.

Before setting possession and completion dates, ask exactly how much time your lender allows for the port and what happens if either transaction is delayed.