How To Port A Mortgage In Canada Successfully

Estimated reading time: 14 minutes

Porting a mortgage requires a thorough understanding of the current mortgage’s fine print – learn about the factors that make porting a mortgage possible!

how to port a mortgage successfully

Should You Break Your Mortgage Or Port It When Selling And Buying A New Home?

Whether you can port a mortgage depends on a few factors, but ultimately, it all depends on numbers.

Porting a mortgage may not be in your best interest, especially if you’re unhappy with your current lender and want to search for a new one.

The good news is that if you can save money and are eligible to pay your mortgage, you’re doing alright.

Understanding Your Mortgage

Renewing a mortgage is far different from porting a mortgage, which I’ll get into later, but in the meantime, wrap your head around this question- How much do I know about my current mortgage?

If you haven’t read the fine print, now is an intelligent time to break out the paperwork. 

Why am I talking about how to port a mortgage today?

Honestly, I had no idea how to port a mortgage in Canada, but I know it’s a common practice in the UK, where I was born.

While living in Canada as a permanent resident, I’ve learned that I can’t compare apples to apples from what I know in the UK to my new life in Canada.

Since we’ve only lived in our home for nine years, I wasn’t even thinking about porting a mortgage, but the topic was brought to my attention.

With the big boom in buying and selling over the past six months in our area, we’ve seen an exponential increase in buying and selling.

Related: Buy the least expensive house in the most expensive neighborhood

Most families that have sold were moving out of the city to profit from their sale and move into a comparable home but at a cheaper price.

Others were building or securing something a bit larger for their growing family.

Although the housing market is cooling down with price adjustments slowly creeping in, homeowners are still determined to buy and sell, hoping to cash in or out.

Can I transfer my mortgage to another house?

For the past two weeks, I’ve helped our friends with work in their homes as they are renovating and painting top to bottom.

They are cleaning up the house and adding some curb appeal because they plan to sell to buy a smaller house with a more extensive property out of town.

While lugging a huge dresser into their storage container on the driveway, he leaned over and asked me if I knew anything about porting a mortgage.

He knows I’m a bit of a finance nerd, always peeking into the real estate market to keep up with trends.

I wasn’t familiar with how to successfully port a mortgage in Canada and whether it was even possible.

I told him I knew what porting a mortgage was as it’s not new to me, but I wasn’t sure how it worked in Ontario.

There’s nothing worse than finding out that you should have done something differently, especially when purchasing one of the most significant investments you may ever have.

What does it mean to port a mortgage?

Porting a mortgage is simply transferring the mortgage amount and interest rate from your old home to your new home and securing the extra borrowing at the same rate.

If you are three years into a 5-year fixed mortgage and want to continue with the same rate, you might be successful in taking it along with you.

Why would you want a portable mortgage?

To save money and keep your current interest rate, which may be lower than the current rate. It’s a pretty simple concept…it’s all about the money, especially with a home purchase, a considerable investment for anyone.

Are you eligible to port a mortgage?

Ah, here’s where things can get tricky.

If you’re unsure if your mortgage is portable, the best thing to do is make an appointment with your lender and review your mortgage documents.

While you are there, you can also talk about whether it’s the best option for you, given current interest rates.

Doing a mortgage rate comparison is essential, especially when you don’t want to pay a penalty for breaking your mortgage.

This is when you want to come prepared with questions about porting a mortgage when looking for advice from your lender.

Remember, they are in the business of making money, so the math falls into your lap.

A portable mortgage is not an option for everyone.

One of the misconceptions about porting a mortgage is that you don’t automatically get to do so.

It’s up to your lender to review your financial situation and whether you’ve been a suitable lender.

They will also want to confirm that you are still working and who your current employer is.

You’ll go through the same scenario when you first went for your mortgage.

Will the CMHC insure your mortgage?

Not only do you have to pass the lenders to qualify for porting a mortgage, but there are also CMHC hoops you need to jump through. 

If your current mortgage is insured by the Canadian Mortgage and Housing Corporation (CMHC), they may allow you to port it.

Here’s the catch…part of it.

All CMHC-insured mortgage loans covering properties originally insured through emili.

Emili is an AVM or (Automated Value Model) and works out the risks based on figures provided to it.

The borrowers on the new application must be the same as on the original approved application.

CMHC’s portability feature allows borrowers to port the CMHC Mortgage Loan Insurance from an existing home to a new home and in some cases save money by reducing or eliminating the premium on the financing of the new home.

The CMHC portability Fact Sheet is comprehensive with all the information you will need to see how porting will benefit you and what you need to qualify.

For example,

  • Maximum purchase price or as-improved property value must be below $1,000,000.
  • All CMHC-insured mortgage loans cover properties originally insured through Emili. The borrowers on the new application must be the same as on the original approved application.

Your minimum equity requirement

5% down payment for the purchase price (or lending value) portion ≤ $500,000.
■■ 10% down payment for the purchase price (or lending value) portion > $500,000.

What are the benefits of porting a CMHC-insured mortgage?

Benefits

  • Reduced Costs — Repeat users of CMHC Mortgage Loan Insurance may be able to save money by reducing or eliminating the mortgage loan insurance premium on the financing of a new home.
  • Competitive Interest Rates — Access to CMHC-insured financing, and as a result, competitive interest rates.
  • Availability — Products and services available coast-to-coast-to-coast.

Source: CMHC website

Do you currently have a variable-rate mortgage?

If yes, then you likely won’t be able to port your mortgage, but if you do have portability built into your current mortgage and it’s a fixed mortgage, you might be in business.

Ideally, before you port a mortgage, you’d want to compare the current fixed mortgage rates to what you have.

If they are higher than your current rate,, filling out a mortgage application to port is probably in your best interest.

Porting Mortgage Isn’t For Everyone

If you think that porting your mortgage will save you money over the term (not the amortization of 25 years), you’ve done the math and are eligible to port; you may want to consider it.

If you’ve researched how to port a mortgage and realize it’s not for you, then at least you’ve done your homework.

One of the smartest moves you can make as a new or experienced homeowner is to research, ask questions, and ensure the math is in your favor.

No one likes to pay more money than they need to.

Saving a buck is nice, but saving thousands is like hitting the mortgage jackpot.

You’ll look at what you can save in interest payments over 2 to 3 years or whatever is left of your current mortgage compared to paying the penalty fees to exit the mortgage contract and pursue a new mortgage rate.

If the savings outweigh the penalties, porting a mortgage could be for you.

Discussion Questions:

  • Have you successfully ported a mortgage in Canada before?
  • What was the process like for you?

A Week In My Life

Trust me, you don’t want to know how my week went.

Ok, I’ll tell you in two words: Strep Throat. After looking at photos online to show me what I had, that grossed me out.

I’m still in recovery mode, thanks to my wife, who suggested I make a doctor’s appointment.

It started in my throat, and then, within days, I was losing my hearing in my left ear.

I’ve spent the last two days ripping the insulation out in our basement to get it re-insulated and ready to be finished.

It makes more sense for us to get this done so our son has more space to run around and play.

I hope your week went better than mine!

Back to work Monday; vacation is over.

Mr.CBB

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Top Finance Weekly Read

I found the flea market flipper website detailing how much money they made flipping flea market items.

They made over $12,000 flipping flea markets and auction finds in just one month.

When I read that, I knew I had to check out what they did to achieve this.

There are some great tips here and lots of money to be made if you know how to negotiate and find the deals.

Making a Difference (MAD) 2017

Welcome to the 2017 Making A Difference series! Join the networking movement of Personal Finance Bloggers around the world.

If you are a personal finance blogger and would like your blog to be featured, drop me an email. I’m currently booking limited spots in August/September 2017.

Hello, Mr. CBB and Readers,

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My name is Leo T. Ly. I am a Realtor, an I.T. project manager, an investor, an entrepreneur, a landlord, and a Canadian personal finance blogger at ISaved5K.com (a.k.a. a jack of all trades).

I enjoy sharing my thoughts and experiences on two main personal finance topics.

The first topic is achieving financial independence by saving your income diligently, managing your money responsibly, and growing your savings with discipline.

The second topic is how to expand your knowledge in the real estate market to increase or protect your wealth.

I am very open and transparent when sharing my finances, as I don’t judge others, and I don’t take offense when people want to believe me.

My main goal is to share my knowledge and try to help others build wealth through initiatives I have personally tried, and I made a net worth of a million dollars over ten years.

I have accumulated wealth by being a disciplined saver, taking advantage of income tax rules, and borrowing money to invest rather than for consumption.

Often I am excited to take advantage of free money from employers and governments and build more passive income sources.

My First Million Dollars

After accumulating my first million dollars, I embark on a second journey towards achieving financial independence.

On this journey, I will strive to increase my net worth to two million dollars and retire by the age of 48 – #Freedom48.

Feel free to drop by my blog, peek at my progress, and get inspired to start your journey if you haven’t started.

Why I started a Canadian personal finance blog.

  1. The first reason is to create awareness that the Canadian education system lacks the primary financial literacy curriculum to prepare the average Canadian for life financially.
  2. Secondly, I want to shatter the perception that discussing money is taboo. To do that, I will be open, and transparent and share my personal finance successes and failures with my readers as I possibly can. There will be no judgment, resentment or jealousy of other people’s financial situations.
  3. Third, I want to build a Canadian personal finance community where like-minded individuals can come to learn, share, and grow their personal finance knowledge. Last but not least, blogging is therapeutic for me, and I am happy to share my tried and tested methods to build wealth with anyone who wants to learn.

Thank you for featuring me Mr. CBB. I look forward to connecting with this community and hope that I can help make a difference.

Fan Brag of the Week

If you’ve got a brag that you would love to share email me a photo and tell us what you’ve got and costs involved.

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Today Jen Peacock is back at it sharing her garage sale deals for the week.

Boy this girl knows how to negotiate!

jens garage sale August 2017

Hey everyone,

I got in a great day of garage sale deals today that I’m excited to share with all of you.

  • Bathroom faucet (brand new) $10 (asking was $20) (our powder room faucet has been broken for several months)
  • Two seasons of Rosanne on DVD and Care Bears DVD for $3
  • Water bottle, two heat registers with pop-ups (brand new), oven mitts $1
  • Two pairs of kids’ headphones for $2
  • Microphone set (brand new) $2 (asking was $3)
  • Leggings and workout capris $.50 (asking was $1)
  • Kids paint for $1
  • 4 Aveeno diaper creams $4 (asking was $8)
  • Kneeling pad, door stopper $.50
  • Kids socks, 3 ladies’ shirts (all brand new with tags), ladies’ New Balance jacket, ladies shirt – ALL FREE!!!
  • Kitchen utensils $.50

Total spent $24.50

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Top Chef Recipe Pick

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Who doesn’t like the taste of Maple in Canada? These Soft Maple Sugar Cookies over at The Novice Chef are perfect for dipping in milk and I bet it’s hard to eat just one.

What I like about these cookies is the maple frosting and the addition of sprinkles.

I like a hard cookie, but every once in a while, I like to give my teeth a break.

DIY Weekly

make your home smell like fall

I know it’s not Fall yet however the pumpkin recipes are flowing all over Pinterest so I thought I’d get ahead of the game with this pretty cool way to Make your home smell like fall.

Creative And Healthy Fun Food has this simple Fall recipe for a Cinnamon and Orange scent that will power through your home.

It doesn’t get any easier and you skip the expensive scented candles and save money.

Search Term Giggles

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Every week I get tens of thousands of people visit Canadian Budget Binder because they did a search online and found my blog.

Most times funny, Sometimes serious.

  • How much someone spends monthly on Canada?– I don’t spend anything on Canada, but I do spend money in Canada.
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  • What happens when an ATM gives you more money– When no one is looking, you give it a giant kiss.
  • I need money fast– Don’t we all?

That’s all the fun for this week. Thanks for dropping by and, we’ll see you all again next Saturday.

Mr.CBB

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Hey…if you see any mistakes let me know. I’m not an editor just a guy who likes to write, and yes I make mistakes.

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One Comment

  1. I ported my mortgage about five years ago when I sold my first home and moved into my current house. If you are staying with the same lender, the cost is minimal as you only have to pay for administration fees. The catch is you have to close on both houses within two to three months of each other. If it’s more than three months, then you won’t be able to port it.

    A few years ago, I went to my current mortgage lender and try to ask for the penalty if I broke my mortgage term. They will charge you either the higher of the three months of interests or the interest rate differential penalty. The three months on interest fees was easy to calculate, but the interest rate differential was hard to calculate and the most likely case is that the lender will just provide you with an arbitrary number, but would not provide you with the calculation if you ask for it. The process to obtain that number with the mortgage lender was not fun. If you want to do it, be prepared to visit or communicate with more than one person at the mortgage lender to get it done.

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