Can a buyer assume my existing mortgage when I sell my Ontario home?

In theory, some mortgages contain an assumption clause allowing a new buyer to take over your existing mortgage terms — including the interest rate — upon purchase. This can be attractive if your rate is lower than current market rates. However, the buyer must qualify with your existing lender just as if they were applying for a new mortgage.

In practice, most lenders in Canada impose strict conditions on assumptions. The buyer must meet the lender's current underwriting standards, and the lender typically charges an assumption fee. There is also a question of your liability: unless you obtain a release from the lender, you may remain on the hook if the assuming buyer later defaults.

Not every mortgage is assumable — check your mortgage agreement or contact your lender to confirm whether your product allows it. If the mortgage is insured through CMHC or another insurer, the assumption must also meet the insurer's rules. Before agreeing to an assumption in a sale transaction, both the seller's and buyer's lawyers should review the mortgage documents and obtain written confirmation from the lender about the terms, fees, and any release of liability.