Let’s say you’re a Canadian homeowner who purchased a home two or three years ago. Fast forward to today, you may be thinking of starting a family, have recently been promoted to a job closer to the city or found a new home in a more affordable neighbourhood.

If you decide to sell and you’re in the middle of a 5-year term, you may assume you’ll have to break your mortgage. But, the good news is that you may be able to port your mortgage instead – also known as transferring your mortgage. This method can actually save you money and help simplify the mortgage process if you’re planning to make a move.

But first, what is mortgage portability?

Mortgage portability allows you to move your existing mortgage rate and terms to a new property. However, while it’s an attractive option for some homeowners, it’s not always available and there are pros and cons to consider.

The pros of mortgage portability

The biggest reason homeowners in Canada port their mortgage is to save money. Porting your mortgage allows you to avoid costly penalties for breaking your mortgage early, and also lets you keep your current mortgage rates and terms. Although rates are currently at a standstill, being able to port your mortgage could save you in the event that rates rise again – which means lower monthly payments on your new home.

Moving homes can also be stressful. Porting your mortgage can save you a lot of time and free up some energy to focus on other aspects of your big move. By keeping your existing mortgage, you eliminate the need to shop around and consider various lender options. This makes the entire process more streamlined and quicker too.

The cons of mortgage portability

It’s important to note that mortgage portability isn't always possible. Some lenders may not offer this option, or they may have specific criteria that must be met to qualify. For example, you may need to purchase a new property that's within a certain distance of your current one. Another thing to keep in mind is that you may not be able to take advantage of better mortgage rates or terms that are available on the market. If you port your mortgage, you’re locked into your existing rates and terms, so you won't have the option to shop around for a better deal.

The most significant factor to note is that if you decide to transfer your mortgage, lenders give you between 30 to 120 days to get it all done. This could add some time pressure into buying a new house and selling your current home.

As a homeowner in Canada, it’s key for you to weigh out the potential savings and risks before you make your decision. If you’re confident in the mortgage features you currently have and don’t wish to explore other options, then porting your mortgage could be the right choice for you. Alternatively, if you want to consider other options and need some expert advice on how and if you should switch your mortgage before the end of your term, our team at Homewise is happy to help. Our mortgage advisors are dedicated to helping you navigate all of the fine print so you can make a decision that best suits your needs. Apply online with us in just five minutes today.