Porting and Assuming Home Loans in Canada

Porting or assuming your mortgage are both ways to help you avoid penalties associated with breaking it. We’re here to walk you through both and if they don’t fit your needs, there is another option to consider too, refinancing. 

Life doesn’t have fine print; new baby, divorce, blending a family, a grandparent moving in/out and the loss of a loved one are each a part of life for many of us. Read on to learn how to navigate the fine print of your mortgage, so you can make the most informed decision when a loss or hopefully a milestone comes your way.

Key Takeaways

• Life doesn’t have fine print, but mortgages do. Learn how to navigate porting or assuming your mortgage when you need to sell early or your co-owner wants out.
• Want to sell your home, but your co-owner wants to stay? To transfer a home loan to another person, they need to assume your mortgage. But first they must qualify.
• Avoid breaking your mortgage! Before making big purchasing decisions, weigh the cons of leaving your mortgage against the pros. If the cons outweigh the pros, consider porting it. Most Canadian home loans are portable, but check with your mortgage broker to be sure.

Breaking Your Mortgage

The penalties involved in breaking your mortgage are at times, unavoidable. We get it, you found your dream condo, it’s overlooking a ravine where your dog can run and swim even! But before you pay thousands of dollars in penalties, find out if porting your mortgage is an option. Your nesto mortgage advisor is a call away to check. See Breaking your mortgage can cost tens of thousands of dollars, but an alternative exists!

How Do You Port Your Mortgage?

Porting a mortgage means to move your mortgage from one home to another. Perhaps you sold before the terms of your mortgage were up? You need to port your mortgage. Many lenders accommodate porting your mortgage, but your rate will likely change, to a blended one. Is your mortgage portable? Connect with our mortgage team to find out – write us now.

Definition: Blended Rate

When porting a mortgage to a new property, lenders find the average of your existing mortgage rate with today’s rate.
(Today’s rate + Your Mortgage Rate) ÷ 2 = Blended Rate

Can I Assume My Mortgage?

Assuming a mortgage means to take on a mortgage that isn’t yours or isn’t yours alone. Transferring your home loan like this depends on many factors about you, the property and your co-owner(s). The most common reason this comes up is when two people buy a home and after a time, one wishes to keep it and assume the mortgage alone as a single owner. This could present a risk for the lender. When you and your c-owner originally applied for the mortgage, the lender assessed risk based on a variety of factors for BOTH of you. Income, credit checks, down payments, monthly bills (and more!) from both applicants painted a picture for the lender that lead to your approval. If one owner were to leave the mortgage, the lender would re-assess risks based on the remaining owner(s).

Important: If you are denied during your application to assume a mortgage, consider a co-signer or a new co-owner.

Tip: If you know assuming a mortgage could be on the horizon, try to keep your monthly bill payments down.

Can You Mortgage Your Property to Buy Another?

The catch with porting your mortgage, is you have to sell the existing home. If you wanted to grow your real estate portfolio and become a landlord, you’re no further ahead if you sell. A good mortgage broker will offer that you refinance your property to buy the new one. Real estate isn’t for everyone, but if you’re up for owning more than the dwelling you live in, the rewards are plenty. See What You Should Know Before Buying an Investment Property.

Tool: No more guessing! Try our refinancing calculator.

You may be further ahead than you realize! Sometimes the down payment boost that refinancing your current home would provide, is attractive to lenders and if you already have tenants committed to one of the properties, you’re in even better shape. See When is it a Good Idea to Refinance Your Mortgage?

How Nesto Works

You may have noticed that it’s both difficult and complicated to port or assume your mortgage. That’s why we’re here! We take on your specific set of circumstances, consider all solutions and ensure your penalties are as low as possible. Let’s keep your real estate goals within reach and get started

Other articles in this guide: “How to Choose a Mortgage Rate“

• Mortgage Terms in Canada
• Should I get a Fixed or Variable Mortgage Rate?
• Mortgage Prepayment
• Skipping a Mortgage Payment
• What is a Cash Back Mortgage?
• Prime Interest Rate in Canada
• What is a Collateral Charge Mortgage