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What does it mean to “Port your Mortgage?”

16 September, 2011 / by Bryan Jaskolka

More Canadians are starting to hear about porting a mortgage, and are wondering not only what that means, but also if it’s something they’ll benefit from. Porting a mortgage simply means taking your current mortgage, with its rates and terms, and moving it to another property. And yes, if you’re going to be moving and you love your current mortgage, porting your mortgage could have some pretty good advantages.
If you’re looking at selling your home and buying a new one, and you want to port your mortgage, you first need to speak to your mortgage broker to find out if you can. Different lenders have different policies regarding porting a mortgage; and it’s also important to understand that while fixed mortgages can often be ported, those with a variable rate generally cannot. You’ll also need to know where you’re moving to so that you’ll be able to determine whether you need a port increase, a port decrease, or a straight port. These types of ports have to do with the amount of the new mortgage that you’ll need or rather, the price of your new home. It’s for this reason that you’ll first need to know where you’re moving to.
You’ll need a port increase if the amount of your new mortgage is higher than the amount of your current mortgage. In these cases, you might need to renegotiate the interest rate you pay on the new amount. Like, a port decrease indicates a situation where your new mortgage is lower than your existing one, and in these cases you may actually face penalties, although you will still end up benefiting from porting your mortgage. A straight port means that both your new mortgage and your current mortgage are the same amount and in this case, the lender or the broker might charge a fee for porting the mortgage.
Porting a mortgage can be a bit tricky, but essentially it’s just moving your mortgage from one address to another. It’s important that if you’re considering porting your mortgage that you speak to your mortgage broker first, maybe even before you start looking at properties. They’ll let you know a) if your mortgage is even eligible for porting, and b) what you’ll need to do in order to make it happen.