Portability

Definition

A clause that lets you carry your current mortgage, with its rate and term, to a new property when you move, instead of repaying it and paying a penalty. It is never automatic. The lender reviews your file and the new property again, imposes a window between the sale and the purchase, often 30 to 120 days, and requires the new loan to be at least equal to the old one. If you need a larger amount, the added portion is financed at today’s rate and the lender calculates a blended rate. Example: a $300,000 balance at 3.2% with two years left, a new home needing $400,000. The $300,000 keeps 3.2%, the added $100,000 takes 4.9%, for a combined rate of about 3.6%. Without portability, an interest rate differential penalty could exceed $10,000.