Porting or Assuming a Mortgage in British Columbia: What to Know

You have a mortgage with a rate you like, and now you are selling, buying, or both. Two ideas come up quickly: porting the mortgage to your next home, or having a buyer assume the one you already have. They sound alike, but they work very differently.

This article explains the difference in plain terms, what the lender is likely to care about, and how the legal paperwork is handled in British Columbia. Every lender sets its own terms, so your mortgage contract is always the starting point.

This article covers the law of British Columbia.

Porting and assuming: two different ideas

Porting means you, the borrower, take your existing mortgage with you to a new property. Assuming means a buyer takes over the seller's existing mortgage so that the loan stays in place while the owner changes. Whether either option is available depends on your mortgage contract and the lender's policies, so neither should be treated as a right.

Porting: check before you sell

If you break a mortgage before the end of its term, you may owe a prepayment charge. FCAC says it is usually the higher of three months' interest on the remaining balance or the interest rate differential. FCAC's example is a $200,000 balance at 6%, a posted rate of 4% and 36 months left, which gives about $3,000 as three months' interest but about $12,000 under the differential.

To limit a penalty, FCAC suggests using prepayment privileges, asking about porting the mortgage to a new home, or waiting until the end of the term if the penalty is large. An open mortgage can be prepaid without penalty. When you confirm that you are prepaying, the lender must give you a written statement of the charge, how it was calculated and how long it is valid, although that Code does not apply to mortgages entered into for business purposes or held by borrowers who are not natural persons.

Also ask about timing. Your sale and your purchase rarely close on the same day, and a lender may have its own rules about how long you have to buy the new home. The new property must meet the lender's standards, and the lender can still refuse a loan.

Assuming a mortgage: the lender decides

Whether a buyer can take over a seller's mortgage, and what the lender asks of that buyer, depends on the mortgage contract and the lender's policies, so it is worth asking the lender early and confirming with a lawyer. For comparison, when lenders pre-approve a new mortgage they review assets, income and debt, and approval is not guaranteed. Typical documents for a new pre-approval include ID, proof of employment, proof of down payment and closing costs, and for self-employed borrowers two years of CRA notices of assessment. What an incoming buyer would need to provide for an assumption is something to ask the lender directly.

Remember too that an assumed mortgage covers only part of the price. The buyer still has to come up with the difference between the price and the balance owing, which can be a large sum. A seller should also ask whether they stay responsible to the lender after the transfer, because that depends on the documents the lender uses.

If you simply want to pay a mortgage off, the Interest Act has a special rule. Where repayment is not due until more than five years after the mortgage date, the borrower may pay it off at any time after five years by paying principal, interest and three months' further interest. This does not apply to mortgages given by corporations.

The legal paperwork in British Columbia

Mortgage and transfer documents are normally registered at the land title office. Under the Notaries Act, a notary in good standing may draw instruments relating to property that are intended, permitted or required to be registered, which covers conveyancing documents, and may also draw affidavits and statutory declarations and administer oaths. Lawyers handle this work too.

Most filing is electronic. The Land Title Act lets the director of land titles designate who may certify electronic documents, and lawyers and notaries are the designates under the LTSA e-filing directions. Those with a Juricert digital certificate can e-sign and file most forms, but not survey plan certifications and certain other forms. A certified document is deemed executed on the date recorded on it, whenever the designate signed.

The Legal Professions Act (SBC 2024, c. 26) would put lawyers and notaries under one regulator, but its sections 1 to 214 are shown as not in force on BC Laws, so the Notaries Act still governs notaries for now. Which documents your deal needs depends on the lender and the transaction, and a lawyer or notary can confirm them.

What to do next

• Read your mortgage contract for porting, assumption and prepayment terms.
• Ask your lender for the written prepayment statement before you decide.
• Ask whether the rate can be ported and how long you have to buy a new home.
• Gather ID, employment proof, down payment proof and tax assessments.
• Have a lawyer or notary review the documents before you sign.

Frequently asked questions