Mortgage Portability: A Smart Strategy for Homeowners

Life is full of changes—whether it's upgrading to a bigger home, relocating for work, or making an investment. If you have an existing mortgage, you may wonder if you can transfer it to a new property without incurring penalties or losing your favorable interest rate. This is where mortgage portability comes in.

Portability allows you to move your existing mortgage to another property, often keeping your current interest rate, term, and balance intact. But not all mortgages are portable, and different lenders have different policies.

Understanding your options can help you make an informed financial decision.

Factor #1: Fixed vs. Variable Rate Mortgages

If you have a fixed-rate mortgage, you’re more likely to have the option to port it. Lenders often use a “blended” system, where your original mortgage rate applies to the transferred portion while any additional amount is calculated at the lender’s current rate. This can help you avoid early repayment penalties.

On the other hand, if you have a variable-rate mortgage, portability is generally not available. If you need to break your mortgage early, you could face penalties, usually amounting to three months’ interest. Depending on your lender, you might be able to recover some of this cost if you refinance with them.

Factor #2: Lender-Specific Porting Rules

While portability can help you save money, it's crucial to understand the specific conditions attached:

• Some lenders require you to buy your new property within a short timeframe—anywhere from the same day to several months—to qualify for portability.

• Certain lenders may require you to take on a longer mortgage term when porting your mortgage.

• Some financial institutions offer partial or full reimbursement of penalties if you take out a new mortgage with them.

• In some cases, it may be more cost-effective to pay the penalty, exit your current mortgage, and secure a new mortgage with a lower interest rate.

  
  

Mortgage portability can be a valuable tool, but it’s not always the best option. Before making a decision, consult a mortgage expert who can analyze your financial situation and help you choose the best strategy.

At EzyLoan, we simplify the mortgage process, ensuring you understand all your options. Contact us today to explore how portability can work for you!