Mortgage Porting

Selling an apartment with a mortgage on it and buying another? There is an option many people have never heard of: port the existing mortgage to the new apartment, rather than closing it and opening a new one. In certain situations this saves a great deal of money.

Disclosure: Educational information only. This is not financial advice. Verify with your bank. Any action you take is your own responsibility.

What porting is

Mortgage porting means transferring your existing mortgage from the apartment you are selling to the new one you are buying, while preserving the same terms: interest rate, tracks and outstanding balance. Instead of closing the old mortgage — potentially paying an early repayment fee — and taking a new one at current rates, you move the charge from one property to the other.

When porting pays off

Porting is particularly valuable when the rate on your existing mortgage is lower than current market rates. In that situation, opening a new mortgage would be more expensive, and closing the old one may also trigger an early repayment fee. Porting preserves your favourable terms and avoids the fee.

If market rates have actually fallen since you took the mortgage, the opposite may be true, and closing it to take a new one — or refinancing — could serve you better.

Porting versus refinancing

Porting moves the same mortgage to a different property, during an apartment change, without altering the terms.

Refinancing replaces the mortgage with new terms, usually on the same property, in order to improve the rate or the mix of tracks.

The two are sometimes combined: porting part of the mortgage while restructuring another part.

How porting works in practice

Porting is arranged with the bank that granted the mortgage, as part of the apartment exchange transaction. The bank assesses the new property for value and security, then transfers the charge.

Coordinating timelines between selling the old apartment and buying the new one is essential and is where most of the friction arises. It is worth establishing in advance what costs porting involves, and comparing them against the alternative of closing the mortgage and taking a new one.

Common mistakes

1. Closing a cheap mortgage and taking an expensive new one, instead of porting.

2. Not checking the early repayment fee before deciding.

3. Not coordinating timelines between the sale and the purchase.

Summary

Mortgage porting is a smart tool for anyone changing apartments — it preserves good mortgage terms and avoids unnecessary fees. Compare your existing rate against the market, and the cost of porting against the alternatives. See mortgage refinancing and mortgage. We provide the knowledge — the decisions remain yours.