Portable Mortgages

Portability allows you to transfer the terms and conditions of an existing mortgage to a new home. This means you can sell one home and keep the same low rate when you buy the next one.

If you expect to move frequently, this can be a very important feature. As long as your mortgage’s interest rate is lower than the prevailing rates, you’ll save money.

Portability can also take the sting out of a mortgage that includes a prepayment penalty clause. Because you don’t pay off the old mortgage and you transfer it to another property, you don’t have to pay penalties.

Of course, portability does require you to receive approval to any changes in the amount of the mortgage. For example, the new property may cost more than the balance you owe on your existing mortgage. You’ll only be able to port the loan if you meet the qualifications to borrow more money.

The property you wish to transfer the mortgage to must also pass a property appraisal of equal value to the amount you still owe, or the amount you wish to increase your principle to. Many lenders actually invite “port and increase” transactions. You keep the same rate on the prior mortgage balance and a new rate on the money you are adding to the mortgage balance. The lender may opt to “blend” the two rates into one new interest rate.

In general, the lender doesn’t charge anything to port a loan. Of course, you will still have to pay the legal fees associated with registering the mortgage against your new home.

If your loan allows another party to assume your loan, then you will have to decide whether you want to port your mortgage to your new or allow the buyer to assume the mortgage on the existing home. You cannot exercise both options if the mortgage allows both.

Portable Genworth, CMHC, and CG Mortgage Insurance

If you are purchasing a home with a mortgage that allows portability, you can also port your mortgage insurance to your next home. This reduces and sometimes even eliminates the premium you would have to pay on a new loan, if you are still unable to put at least 20% down on your new home. Genworth only allows straight ports, meaning you cannot increase your loan to value ratio above 95%. CMHC suggests you look to your lender for the terms and conditions under which your mortgage is portable.