Porting and Assuming Mortgages in Canada: What You Need to Know
Life is unpredictable — a growing family, a sudden job transfer, or a relationship change can mean you need to move sooner than planned. If you’re already locked into a mortgage, the idea of breaking it — and paying thousands in penalties — might feel overwhelming. But there’s good news: you might not need to break it at all.
Two common options Canadians explore are porting your mortgage and assuming someone else’s. They can help you avoid penalties and stay on track with your real estate goals. Let’s unpack both, along with a third smart strategy: refinancing your current property to buy a new one.
What Does It Mean to Port a Mortgage?
Porting your mortgage means you’re carrying your existing mortgage to a new property. This can be a lifesaver if you’re moving before your mortgage term ends. Instead of breaking your contract and facing a prepayment penalty, you might be able to transfer the mortgage to your new home.
Most lenders in Canada allow this, but conditions apply:
- The new home must be approved by the lender.
- Your financial situation must remain strong.
- Your interest rate may become blended with current market rates.
Blended Rate Example:
If your current mortgage rate is 2.5% and the lender’s current rate is 4.5%, your new blended rate could be around 3.5%.
📊 How Blended Mortgage Rates Are Calculated
When porting your mortgage to a new home, most lenders combine your current mortgage rate with their current posted rate. This creates a blended rate, shown in this example:
| Item | Rate |
|---|---|
| Your existing mortgage rate | 2.5% |
| Lender’s current posted rate | 4.5% |
| Estimated blended rate | 3.5% |
Note: The actual calculation may also factor in remaining term, loan balance, and lender policy — so this is a simplified illustration.
Pro Tip: Always check if your mortgage is portable before listing your home. Not all lenders allow it, and timing matters — some only offer a 30–90 day window to close both transactions.
Can Someone Else Assume Your Mortgage?
If you’re trying to get out of your mortgage, and someone else (like your co-owner or a buyer) wants to take over, this is called assuming a mortgage.
This typically happens in scenarios like:
- A divorce where one partner wants to keep the house
- A family transfer of ownership
- A buyer taking over a low-interest mortgage in today’s high-rate market
But here’s the catch: the person assuming the mortgage must qualify on their own. The lender will reassess their income, credit score, debt load, and other risk factors — just like they did with both of you when the mortgage was first approved.
📋 Mortgage Assumption Approval Checklist
Thinking about transferring a mortgage to another person? Here’s what lenders typically review before approving an assumption:
- ✅ Proof of Income – Recent pay stubs, employment letter, or income tax documents
- ✅ Credit Score – A strong credit history is essential to prove repayment ability
- ✅ Debt-to-Income Ratio – Lenders assess whether existing debts are manageable
- ✅ Down Payment or Equity – Sufficient equity or funds may be required
- ✅ Property Valuation – Some lenders reappraise the property before assumption
- ✅ Consent of Original Lender – Not all mortgages are assumable by default
- ✅ Co-signer (if needed) – Can be used if the primary applicant falls short on criteria
Tip: If you’re planning ahead for a potential assumption, keep monthly expenses low and avoid late payments — it strengthens your application.
Important: If the person doesn’t qualify alone, the lender may decline the transfer. In that case, a co-signer or new co-owner might be required.
Tip: If you think assumption might be in your future, keep monthly expenses low and credit healthy — it’ll help your case.
Can You Use One Property’s Equity to Buy Another?
What if you’re not selling your home — you just want to buy a second one?
In that case, porting doesn’t apply, because porting requires you to sell the original home. But there’s another solution: refinancing your existing mortgage to tap into your home equity. This can give you the down payment for an investment property or new home.
📌 Refinance to Buy Another Property
Wondering if you can tap into your current home’s equity to buy another property? Use this calculator to estimate how much you could access through refinancing.
80% (Standard) 75% 70%
Real estate investing isn’t just for big developers — many Canadians start by renting out their first home and buying another to live in. If you’ve built up some equity and can cover the new loan’s costs with rental income or savings, you might already qualify.
📈 Refinance vs. Break vs. Port – Cost Comparison
Here’s a quick look at the typical costs associated with each mortgage strategy. Actual amounts vary based on your lender, interest rate, and remaining term.
| Strategy | Common Costs | Estimated Range | Notes |
|---|---|---|---|
| 🔁 Porting Your Mortgage | Appraisal fee, admin charges, possible blended rate | $300 – $1,500 | Least expensive if your mortgage is portable and the timing aligns |
| 💥 Breaking Your Mortgage | Prepayment penalty, discharge fees | $2,000 – $25,000+ | Penalty depends on interest rate differential (IRD) or 3-month interest |
| 📊 Refinancing Your Mortgage | Legal fees, appraisal, discharge, potential new setup costs | $2,000 – $5,000+ | Can unlock equity to buy another home — great for investors |
Tip: A mortgage advisor can help calculate the exact costs and tell you which option saves the most over the long term.
What Happens If You Break Your Mortgage Anyway?
Sometimes, even with all the best options, breaking your mortgage is unavoidable. But before you take the plunge, be sure you know what it could cost.
Depending on your lender and mortgage type (fixed vs variable), prepayment penalties can range from three months’ interest to tens of thousands due to interest rate differential (IRD) formulas.
💥 Example Penalties for Breaking a $400,000 Fixed Mortgage Mid-Term
Here’s what you might expect to pay if you break a fixed-rate mortgage halfway through a 5-year term. These are estimates — your actual penalty depends on your lender’s formula and current rates.
| Lender Type | Penalty Type | Estimated Cost | Notes |
|---|---|---|---|
| Big Bank (e.g., RBC, TD) | Interest Rate Differential (IRD) | $12,000 – $22,000 | Uses posted rate vs. contract rate – often highest penalties |
| Monoline Lender | IRD | $5,000 – $10,000 | Calculates IRD with discounted rates – usually lower than banks |
| Variable-Rate Mortgage (any lender) | 3 Months’ Interest | $2,000 – $3,500 | Penalty is simpler and often cheaper than fixed-rate break |
📌 Always ask your lender or broker for a written penalty quote before deciding to break your mortgage.
If that’s the case, don’t panic. A good mortgage advisor can help you weigh whether paying the penalty and switching to a better rate is worth it in the long run.
How a Mortgage Broker Can Help You Navigate All This
Porting, assuming, refinancing — it can feel like alphabet soup. That’s why having a professional mortgage broker in your corner is so valuable. They can:
- Analyze whether porting is allowed by your lender
- Help you or your co-owner qualify for an assumption
- Run numbers on refinancing to unlock equity
- Minimize your penalties if you do break your mortgage
💬 Need Help with Porting or Assuming Your Mortgage?
Our mortgage experts can walk you through your options, calculate the costs, and help you choose the smartest move for your next step.
Talk to an Expert TodayAt Mortgage.Expert, we don’t just show you options — we guide you through them, step-by-step, with clarity and confidence.
Final Thoughts: Every Situation Is Unique — And So Is Your Mortgage Strategy
There’s no one-size-fits-all solution when life throws a curveball. Whether you’re relocating, separating, upgrading, or investing — your mortgage should work with you, not against you.
Before you rush to break your mortgage or stress about penalties, explore your options:
- Port your mortgage to a new home
- Assume the loan if a co-owner or buyer qualifies
- Refinance to access equity without selling
And when in doubt, ask a professional. A quick conversation with a mortgage broker can save you thousands — and a whole lot of stress.
📞 Speak with a Mortgage Broker – Avoid Costly Mistakes
Before making any big decisions, talk to an expert who can break down your numbers, protect you from penalties, and guide you through your best mortgage options.
Book Your Free Consultation
Clara Desai
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