Quick Answer...

Mortgage portability in Canada refers to the ability of a homeowner to transfer their existing mortgage from one property to another without incurring significant penalties or fees. This can be a valuable feature for homeowners who want to sell their current home and purchase a new one while keeping their existing mortgage terms, including the interest rate and remaining term.
 

Here's how mortgage portability works in Canada:
 

1. Eligibility: Not all mortgages are portable, and eligibility criteria can vary between lenders. Typically, you need to have a portable mortgage feature included in your original mortgage agreement.
    

2. Sell Your Current Home: To use mortgage portability, you must first sell your current home. The proceeds from the sale can be used to pay off the existing mortgage.
    

3. Buy a New Home: Once you've sold your current home, you can use the remaining mortgage balance and transfer it to the purchase of your new home.
    

4. Maintain Existing Terms: The advantage of mortgage portability is that you can maintain the terms and conditions of your existing mortgage, including the interest rate and remaining term. This can be particularly beneficial if you have a low-interest rate mortgage in a rising interest rate environment.
    

5. Adjustment: If the new property's purchase price is higher than the outstanding mortgage balance, you'll typically need to negotiate the terms for the additional funds required. This might involve a blend-and-extend approach, where a new interest rate is calculated based on the old and current rates.
    

6. Application Process: To port your mortgage, you'll need to work with your current lender or a new lender who accepts portable mortgages. They will evaluate your financial situation and ensure you meet their criteria.
    

7. Fees and Penalties: While mortgage portability can save you money compared to breaking your mortgage and getting a new one, there may still be fees associated with the process. These can include transfer fees and legal fees.
   
    

Mortgage portability can be a useful option for homeowners who want to move without incurring the high costs of breaking their existing mortgage and securing a new one. It's important to carefully review your mortgage agreement, understand the terms and conditions, and consult with your lender to determine if mortgage portability is a viable option for your specific situation.