Mortgage Porting Explained

Porting your mortgage: The ability to move your existing mortgage to your new home. Why port your mortgage? The only reason to port your mortgage to your new home is to save paying the penalty. That’s it. If you have a great rate on your existing mortgage, you will want to keep that rate? Especially if the current mortgage rates are higher than your existing mortgage rate.

Myth: You can move the mortgage without qualifying – myth; you can port your mortgage to the next property but, you still must qualify for the new mortgage.

Let’s look at an example: 

If your new home needs a smaller mortgage than your existing mortgage, you will pay the penalty on the unused portion. See below for an example.

New Mortgage Required: $300,000.00 – you will need to qualify

Existing Mortgage: $350,000.00

Port: $300,000.00 – (no penalty)

You will pay the penalty on $50,000.00 based on your contract, will on:

The process is the same as when you bought your current home. You will still need to have a down payment. The down payment will most likely come from the sale of your existing house. The existing home must be firmly sold or unconditionally sold to use bridge financing, should you need it.

What happens if you want to port your existing mortgage, but it’s not a large enough amount? No worries, we can port and increase.

Let’s look at an example of port and increase. 

New Purchase: $400,000.00 with top-up (meaning increase to the mortgage amount)

The existing home sale leaves you with a 10% down payment and a current mortgage balance of $350,000.00 (port) for the new home.

$400,000.00- purchase price

$ 40,000.00 – down payment

$360,000.00 – mortgage request

$ 8,000.00 – default insurance fee – we can port this fee as well if you paid it on your existing mortgage (if you have a 20% down payment, you do not need to pay the default insurance fee, but the process is the same)

$368,000.00 – new mortgage request

$350,000.00 – the remainder of the previous mortgage that we are porting at the current rate and remaining term.

$ 18,000.00 – new mortgage money – This portion will be at the new rate and blended into the existing rate and remaining term to create a new five-year a term.

New Purchase: $400,000.00 – with a penalty – meaning a decrease to the mortgage amount

The existing home sale leaves you with a 10% down payment and a current mortgage balance of $380,000.00 (port) for the new home.

$400,000.00

$ 40,000.00 – down payment

$360,000.00 – mortgage request

$ 8,000.00 – fee – we can port this fee as well

$368,000.00 – new mortgage request

$380,000.00 – the remainder of the previous mortgage that we are porting at the current rate

$ 12,000.00 – remaining mortgage money – This portion will have a penalty as per your contract.

Quick Notes: 

• you have to qualify for a mortgage, always
• you can blend and extend your existing rate
• sometimes paying the penalty on your current mortgage is in your best interest
• often paying a new default insurance fee is more affordable than doing a top-up fee

Not all mortgages are not created equal; know your options. I’m here to help.

If this blog is as clear as mud, call me. I am here to clarity, educate, and support you throughout the process. You may only apply for a mortgage a few times in a lifetime; I process mortgages several times a day. Lean on me.