17 Oct Is My Mortgage Portable?

Is My Mortgage Portable?

Planning to move and wondering if your mortgage is able to move with you? 

Fixed-rate products usually have a portability option. Lenders often use a “blended” system where your current mortgage rate stays the same on the mortgage amount ported over to the new property and the new balance is calculated using the current rate. With variable-rate mortgages, however, porting is usually not available. This means that when breaking your existing mortgage, a three-month interest penalty will be charged. This charge may or may not be reimbursed with your new mortgage. While porting typically ensures no penalty will be charged when you sell your existing property and buy a new one, it’s best to check with your mortgage broker for specific conditions. Some lenders allow you to port your mortgage, but your sale and purchase have to happen on the same day, while others offer extended periods.

If I want to move before my mortgage term is up, what are my options?

The answer to this question often depends on your specific lender and what type of mortgage you have. As mentioned while fixed mortgages are often portable, variable are not. Some lenders allow you to port your mortgage, but your sale and purchase have to happen on the same day, while others offer extended periods. As long as there’s not too much time between the sale of your existing home and the purchase of the new home, as a rule of thumb most lenders will allow you to port the mortgage. In other words, you keep your existing mortgage and add the extra funds you need to buy the new house on top. The interest rate is a blend between your existing mortgage rate and the current rate at the time you require the extra money.

When looking for a mortgage, we tend to focus on the best interest rate, but understanding the terms, i.e portability and potential penalties for changes, is important. Ask your mortgage broker about portability and if there are any penalties if you make changes when evaluating your mortgage options.

Source: Reni McNeil of Mortgage Brokers Ottawa

We are always happy to assist and answer your questions or discuss the Ottawa market with you. We are real estate agents in the greater Ottawa area with the expertise to help you find a home in the neighbourhood of your dreams!