The Hidden Secrets of Mortgage Portability in Canada: What Most Homeowners Don’t Know
What is Mortgage Portability?
Mortgage portability allows homeowners to transfer their existing mortgage to a new home when they move.
It helps avoid penalties and extra fees from breaking your mortgage early.
Benefits of Mortgage Portability:
Avoid Prepayment Penalties: If you're locked into a fixed-rate mortgage, portability lets you keep the same rate without penalties.
Save on Closing Costs: You may save money on closing costs since you're transferring an existing loan.
Preserve the Term and Interest Rate: You can keep the same mortgage term and interest rate as your current home, which could be beneficial if rates rise.
When Should You Consider Mortgage Portability?
If interest rates have increased and you’re still within a favorable rate.
If you're not looking to refinance or change mortgage terms.
Conditions to Watch For:
Some lenders have strict eligibility rules for mortgage portability (e.g., must buy a home of equal or greater value).
The new property must be within the same area or a similar market.
You may still have to pay for appraisal and legal fees.
Potential Downsides of Mortgage Portability:
Limited flexibility: Some lenders may not allow you to port a mortgage if your new home is too far or different in value.
Portability may not be available on all types of mortgages (e.g., certain fixed-rate mortgages).
You could face additional fees if your mortgage is paid off early in other ways (e.g., by selling before moving).
Is Portability Always the Best Option?
Sometimes, refinancing might provide better terms or lower rates than porting an old mortgage.
It’s important to compare the cost of porting versus refinancing based on your long-term plans.
