The short answer
The two options
| Portable mortgage | Assumption (takeover) | |
|---|---|---|
| Who keeps the loan | You, on the new property | The buyer, on the property you sell |
| What you keep | Rate, term, conditions | Nothing: you are released if the lender agrees |
| What the lender checks | Income, credit and the new property | The buyer’s income and credit |
| Penalty | Avoided if the contract rules are met | Avoided if the buyer takes over the loan |
The contract says whether the loan is portable, within what delay and under what conditions. A lender may refuse if the new property does not meet its rules.
When the loan is CMHC-insured
An insured loan can be transferred to a new property. Three cases:
- Simple transfer: the balance, remaining amortization and loan-to-value do not rise. No new premium.
- Transfer with a larger loan: the premium is charged on the new funds at a separate rate. For example, 6.25% for a 85.01% to 90% ratio, instead of 3.10% on the whole loan.
- Transfer with a higher ratio, same amount: amortization stays at the remaining term.
Main conditions: the application must be received within 6 months of closing on the first property, the loan must be in good standing, the new property must have the same use, and at least one borrower must be on both loans.
A CMHC example
Frequently asked questions
Can I port my loan if I buy before selling?
It depends on the contract. CMHC requires the first property to be sold for an insurance transfer; a bridge loan can cover the gap.
Does porting avoid the penalty?
If the contract allows it and you meet its conditions, yes. Otherwise breaking the loan triggers the penalty.
What if the new price is higher?
You add funds, often at today’s rate, and the added portion follows its own terms.