As Simple as Porting Your Mortgage!

Lisa Manwaring • February 5, 2020

As simple as porting your mortgage! Said by no one ever. The truth is, there is nothing simple about porting your mortgage.

"Porting your mortgage" involves transferring the remainder of your existing mortgage term, outstanding principal balance, and interest rate to a new property. This is of course, if you are selling your current home and buying a new one.

Despite what some of the big banks would lead you to believe, porting your mortgage is not an easy process. It's not a magic process that guarantees you will qualify for the purchase of a new property using the mortgage you had on a previous property. In addition to completely re-qualifying for the mortgage, and having to qualify the property you are purchasing, there are a lot of moving parts that come into play. It seems that executing a port flawlessly is like having the stars align perfectly, chances are, it's not going to happen. Here are a few reasons why:

  • You may not qualify for the mortgage.

Let's say you are moving to a new city to take a new job, if you are relying on porting your mortgage in order to buy a new house, you will have to substantiate your new income. If you are on probation, or have changed professions, there is a chance the lender will decline your application. Porting a mortgage is a lot like qualifying for a new mortgage, just with more conditions.

  • The property you are buying has to be approved.

So let's say that your income is in good shape, and that you qualify for the mortgage, the property you want to purchase has to be approved as well. Just because they accepted your last property as collateral for the mortgage, doesn't mean the lender will accept the new property. An appraisal will be required, and the condition of the property you are buying will be scrutinized.

  • Value's are rarely the same.

How often do you buy a property that is exactly the same value as the one you just sold? Not very often. And when it comes to porting your mortgage, if the value of the new home is higher than the outstanding balance on your existing mortgage, you will most likely have to take a blended rate on the new money, which could increase your payment. If the property value is considerably less, you might actually incur a penalty to reduce the total mortgage amount. If the value of the properties are different, the terms of your mortgage will be amended anyway!

  • You still need a downpayment.

Porting a mortgage isn't just a simple case of swap one property for the another and keep the same mortgage. You're still required to come up with a downpayment on the new property.

  • You will most likely have to pay a penalty.

When you sell your house, most lenders will charge the full penalty and take it from your sale proceeds of your property. They will of course refund it back to you when you execute the port and purchase the new property. So if you were relying on the proceeds of sale to come up with your downpayment on the property you are purchasing, you might have to make other arrangements.

  • Timelines almost never work out.

It's rarely a buyers and a sellers market at the same time. So although you may be able to sell your property overnight, you might not be able to find a suitable property to buy. Alternatively, you might be able to find many suitable properties to purchase while your house sits on the market with no showings. And when you do end up selling your property, and finding a new property to buy, chances are the closing dates won't match up perfectly.

  • Different lenders have different port periods.

This is where the fine print in the mortgage documents comes into play. Did you know that depending on the lender, the period of time you have to port your mortgage can range from 1 day to 6 months? So if it's 1 day, your lawyer will have to close both the sale of your property and the purchase of your new property on the same day, or the port won't work. Or with a longer port period, you run the risk of selling your house with the intention of porting the mortgage, only to not be able to find a suitable property to buy.

So as you can see, although porting your mortgage may make sense if you have a low rate that you want to carry over to a property of similar value, it is always a good idea to get professional mortgage advice and look at all your options.

Please contact me anytime if you would like to discuss mortgage financing, I'd love to work with you!

LISA MANWARING

MORTGAGE EXPERT

LET'S TALK

RECENT POSTS

Why The Subject Property Matters

By Lisa Manwaring • May 7, 2025
When looking to qualify for a mortgage, typically, a lender will want to review four areas of your mortgage application: income, credit, downpayment/equity and the property itself. Assuming you have a great job, excellent credit, and sufficient money in the bank to qualify for a mortgage, if the property you’re looking to purchase isn’t in good condition, if you don't have a plan, you might get some pushback from the lender. The property matters to the lender because they hold it as collateral if you default on your mortgage. As such, you can expect that a lender will make every effort to ensure that any property they finance is in good repair. Because in the rare case that you happen to default on your mortgage, they want to know that if they have to repossess, they can sell the property quickly and recoup their money. So when assessing the property as part of any mortgage transaction, an appraisal is always required to establish value. If your mortgage requires default mortgage insurance through CMHC, Sagen (formerly Genworth), or Canada Guaranty, they’ll likely use an automated system to appraise the property where the assessment happens online. A physical appraisal is required for conventional mortgage applications, which means an appraiser will assess the property on-site. So why is this important to know? Well, because even if you have a great job, excellent credit, and money in the bank, you shouldn’t assume that you’ll be guaranteed mortgage financing. A preapproval can only take you so far. Once the mortgage process has started, the lender will always assess the property you’re looking to purchase. Understanding this ahead of time prevents misunderstandings and will bring clarity to the mortgage process. Practically applied, if you’re attempting to buy a property in a hot housing market and you go in with an offer without a condition of financing, once the appraisal is complete, if the lender isn’t satisfied with the state or value of the property, you could lose your deposit. Now, what happens if you’d like to purchase a property that isn’t in the best condition? Being proactive includes knowing that there is a purchase plus improvements program that can allow you to buy a property and include some of the cost of the renovations in the mortgage. It’s not as simple as just increasing the mortgage amount and then getting the work done, there’s a process to follow, but it’s very doable. So if you have any questions about financing your next property or potentially using a purchase plus improvements to buy a property that needs a little work, please connect anytime. It would be a pleasure to walk you through the process.

How Employment Status Impacts Your Mortgage Application

By Lisa Manwaring • April 30, 2025
Chances are if you’re applying for a mortgage, you feel confident about the state of your current employment or your ability to find a similar position if you need to. However, your actual employment status probably means more to the lender than you might think. You see, to a lender, your employment status is a strong indicator of your employer’s commitment to your continued employment. So, regardless of how you feel about your position, it’s what can be proven on paper that matters most. Let’s walk through some of the common ways lenders can look at employment status. Permanent Employment The gold star of employment. If your employer has made you a permanent employee, it means that your position is as secure as any position can be. When a lender sees permanent status (passed probation), it gives them the confidence that you’re valuable to the company and that they can rely on your income. Probationary Period Despite the quality of your job, if you’ve only been with the company for a short while, you’ll be required to prove that you’ve passed any probationary period. Although most probationary periods are typically 3-6 months, they can be longer. You might now even be aware that you’re under probation. The lender will want to make sure that you’re not under a probationary period because your employment can be terminated without any cause while under probation. Once you’ve made it through your initial evaluation, the lender will be more confident in your employment status. Now, it’s not the length of time with the employer that the lender is scrutinizing; instead, it’s the status of your probation. So if you’ve only been with a company for one month, but you’ve been working with them as a contractor for a few years, and they’re willing to waive the probationary period based on a previous relationship, that should give the lender all the confidence they need. We’ll have to get that documented. Parental Leave Suppose you’re currently on, planning to be on, or just about to be done a parental leave, regardless of the income you’re now collecting, as long as you have an employment letter that outlines your guaranteed return to work position (and date). In that case, you can use your return to work income to qualify on your mortgage application. It’s not the parental leave that the lender has issues with; it’s the ability you have to return to the position you left. Term Contracts Term contracts are hands down the most ambiguous and misunderstood employment status as it’s usually well-qualified and educated individuals who are working excellent jobs with no documented proof of future employment. A term contract indicates that you have a start date and an end date, and you are paid a specific amount for that specified amount of time. Unfortunately, the lack of stability here is not a lot for a lender to go on when evaluating your long-term ability to repay your mortgage. So to qualify income on a term contract, you want to establish the income you’ve received for at least two years. However, sometimes lenders like to see that your contract has been renewed at least once before considering it as income towards your mortgage application. In summary If you’ve recently changed jobs or are thinking about making a career change, and qualifying for a mortgage is on the horizon, or if you have any questions at all, please connect anytime. We can work through the details together and make sure you have a plan in place. It would be a pleasure to work with you!
More Posts