Porting a Mortgage in Ontario: How It Works and When It Makes Sense

When you sell your home and buy another one, you have a choice: pay out your current mortgage and start fresh, or carry it with you. Porting a mortgage means transferring your existing mortgage — including the remaining term and interest rate — to the new property you are buying. Done right, it can help you avoid a costly prepayment penalty and lock in a rate that may be better than what is available today.

But porting is not automatic, not always available, and comes with conditions that trip up even experienced buyers. This article explains how mortgage porting works in Ontario, when it pays off, and what to watch out for.

What "Porting" Actually Means

Porting is a contractual feature — not a legal right. It only applies if your mortgage agreement includes a portability clause. You are essentially asking your lender to:

1. Release the existing charge on the property you are selling
2. Register a new charge on the property you are buying
3. Keep the same mortgage terms (rate, remaining amortization, payment structure) in place

The lender must agree to the new property as adequate security and must approve you (again) as a borrower under current qualification rules.

When Porting Saves You Money

The main benefit is avoiding the prepayment penalty that would otherwise apply if you broke the mortgage early. For fixed-rate mortgages, this penalty can be the greater of three months' interest or the Interest Rate Differential (IRD) — sometimes tens of thousands of dollars.

Porting also preserves your existing interest rate. If you locked in a low rate a few years ago and rates have risen since, carrying that rate forward can mean meaningful savings over the remaining term.

The Typical Porting Process in Ontario

1. Check your mortgage contract. Confirm your mortgage is portable. Look for a "portability" clause — your original commitment letter or mortgage documents should state this clearly.

1. Notify your lender early. Contact your lender as soon as you know you are selling and buying simultaneously. Lenders typically require that the sale and purchase close on the same day or within a defined window (often 30–90 days, but this varies).

1. Re-qualify as a borrower. Even though you are keeping the same mortgage, the lender will re-underwrite you — current income, debt ratios, the new property's value. If your financial situation has changed significantly, the lender may decline the port.

1. Coordinate your lawyers. Your real estate lawyer handles the discharge on the sold property and the new registration on the purchased property. This needs precise coordination because both transactions must close in sync.

1. Handle any gap between purchase and sale prices. This is where porting gets more complex (see below).

What Happens If You Are Buying a More Expensive Home?

If the new property costs more than the one you are selling, you need additional funds beyond the ported mortgage. Most lenders handle this with a blend and increase:

• The existing mortgage balance is ported at your current (lower) rate
• The additional amount needed is added at the current market rate
• The two amounts are blended into a single payment at a weighted average rate

This can still be worthwhile if your existing rate is significantly below market, but you should run the numbers carefully — sometimes the blended rate is not meaningfully better than simply breaking and starting fresh, once penalties are factored in.

What If You Are Buying a Less Expensive Home?

If the new property is cheaper and you need less mortgage, you are paying down the difference. The lender will treat that reduction as a partial prepayment. Depending on your contract, this may trigger a partial penalty. Ask your lender specifically about this scenario before assuming the port is penalty-free.

Common Porting Pitfalls

Same-day closing requirements. Many lenders require the sale and purchase to close on the same day. If there is even a one-day gap, some lenders treat it as a break and port separately — which can mean a penalty. Confirm the window with your lender and build this into your negotiation for closing dates.

Bridge financing. If the purchase closes before the sale, you may need bridge financing to cover the down payment gap. This is a short-term loan secured against your existing property while the sale is pending. Your lawyer can help coordinate this.

The lender may not approve the new property. The new property must meet the lender's security standards. If it is a rural property, a property with a non-standard structure, or one with title issues, the lender may refuse to accept it as collateral — even if you are an otherwise strong borrower.

Variable-rate mortgages. Porting is most valuable for fixed-rate mortgages where the penalty savings are largest. Variable-rate penalties are typically lower (usually three months' interest), so the calculation is different. Sometimes it makes more sense to simply break a variable-rate mortgage and start fresh rather than go through the complexity of porting.

Frequently asked questions