What is mortgage porting?
Porting means moving your existing mortgage from your current home to a new one. Instead of breaking your mortgage (and paying a penalty), you transfer the terms — rate, remaining term, and amortization — to a new property. Most fixed-rate and variable-rate mortgages in Canada include portability as a standard feature, though conditions vary significantly by lender. Some lenders allow porting only to a new principal residence, while others permit porting to investment properties as well.
Your mortgage contract specifies the porting conditions. If you are unsure, your broker can review your existing mortgage documents and confirm whether porting is an option and what the specific requirements are.
When porting makes sense
Porting is most beneficial when your current rate is lower than current market rates. If you locked in at 3.49% for 5 years and rates have since risen to 5.29%, porting lets you keep that lower rate for the remainder of your term. The savings can be substantial: on a $400,000 balance, each 1% rate difference saves approximately $4,000 per year in interest. Over 3 remaining years at 1.8% below market, that is roughly $21,600 in savings.
Porting also avoids prepayment penalties. Breaking a fixed-rate mortgage can cost you the greater of 3 months' interest or the Interest Rate Differential (IRD), which can be thousands of dollars. The IRD is calculated based on the difference between your contract rate and the lender's current rate for the remaining term — when rates have risen, the IRD can be very large. Porting eliminates this penalty entirely.
How porting works
The process typically involves several coordinated steps that require careful timing:
- Notifying your existing lender that you plan to move — ideally 60-90 days before your closing date
- Getting pre-approved for the port — the lender will need to approve the new property and your continued qualification at the stress test rate
- Selling your current home and closing the sale — the mortgage is paid out from the sale proceeds, and the port transfers the remaining balance
- Closing on the new purchase with the ported mortgage — the ported amount carries forward at your existing rate and terms
If the new property costs more than the current mortgage balance, you may need to blend and extend — combining the ported amount at your old rate with a new amount at the current rate. The two portions carry different rates within a single mortgage product.
Blend and extend explained
When your new mortgage is larger than your current balance, a blend-and-extend combines the old rate on the existing balance with a new rate on the additional funds. The resulting blended rate falls somewhere between your old rate and the current market rate. You also extend the term to match a standard 5-year term, resetting the clock on when your mortgage matures.
You have a $400,000 mortgage at 3.49% with 2 years remaining. You buy a $700,000 home and need a $500,000 mortgage. Your lender may offer a blended rate of 4.59% — higher than your original 3.49% but lower than current market rates of 5.29% — with a new 5-year term. The blend calculation: ($400,000 × 3.49% × 2 years + $100,000 new money at 5.29%) / $500,000 total, averaged and adjusted for the term extension. The lender adds a small premium for extending the term, resulting in the 4.59% blended rate.
Porting vs breaking: cost comparison
Consider a borrower with a $400,000 mortgage at 2.5% with 2 years remaining, moving to a $600,000 home needing a $450,000 mortgage. Current market rates are 5.0%. Breaking the mortgage would trigger an IRD penalty of approximately $8,000-12,000 (depending on the lender's IRD calculation), plus the new mortgage at 5.0%. Porting avoids the penalty and keeps the 2.5% rate for 2 more years on the first $400,000, with the additional $50,000 at 5.0% as a blend-and-extend. Total savings from porting: $8,000-12,000 in penalty avoided, plus $8,000-10,000 in interest savings on the ported portion over 2 years. Total: $16,000-22,000.
When porting is not ideal
Porting is not always the right choice. It makes less sense when current rates are lower than your existing rate — in that case, breaking and renegotiating may save more. Also consider alternatives if the new property does not qualify with your current lender (rural property, condo with low owner-occupancy, multi-unit beyond policy limits), if you need to refinance and access significant equity (a full refinance with a new lender may be better), or if a different lender offers a better overall package including cash incentives that offset the penalty. Your broker can run the numbers both ways to determine which option nets out better.
Timing considerations
Porting requires careful timing between the sale of your current home and the purchase of your new one. Most lenders allow a porting window of 30-90 days between closing the sale and completing the purchase. If you are buying and selling on the same day, your lawyer can coordinate the port with the lender to ensure both transactions close simultaneously. If there is a gap between closings, you may need bridge financing — a short-term loan that covers the period between closing dates. Discuss timing with your broker and lawyer well in advance, ideally when you first list your current home for sale.
