Selling and Buying at Once: How Mortgage Porting and Break Penalties Work
Carry your low rate to the next home and sidestep a costly break penalty
When I sell and buy at the same time, can I keep my old low mortgage rate?
Yes — by porting your mortgage, you transfer the existing balance, rate and terms to the new home instead of breaking the contract.According to FCAC (Financial Consumer Agency of Canada), the main benefit of porting is keeping a below-market rate while avoiding the prepayment penalty you would otherwise pay to break early. The catch: you must close the sale and purchase within your lender’s time window and re-qualify for the new mortgage.
Sources: FCAC / canada.ca (porting and breaking a mortgage); CIBC and RBC product pages (porting and blend mechanics); Bank of Canada (June 2026 policy rate); OSFI (minimum qualifying rate / stress test).
A common situation in my practice: a client locked a great rate a couple of years ago, now wants to move, and is dreading re-borrowing at today’s higher rates. There is an underused tool for exactly this — porting — and used well it can carry that low rate to the new home and save thousands in break penalties. Here is the mechanism, the penalty math, and the timing traps.
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What porting is: move the loan, not break it
Borrowing more: the blended ‘port-and-increase’
If you can’t port: fixed vs variable penalty math
⚠️IRD can be large. On a fixed-rate loan with a long remaining term, the differential can run into five figures. If you are likely to move within a few years, ask about portability and the penalty clause when you choose the product — an easily overlooked but valuable detail.
The timing window: sale and purchase must line up
ℹ️Rate backdrop: According to the Bank of Canada, the policy rate was held at 2.25% on June 10, 2026 — well below the ~5% peak of 2023, yet most rates locked a few years ago still sit below today’s new-loan rates. That gap is exactly why porting still pays.
Remember: porting means re-qualifying
Frequently Asked Questions
What’s the difference between porting and refinancing?
Porting moves your existing mortgage intact to a new home, keeping the old rate and remaining term — usually when you sell and buy together. Refinancing negotiates a new loan, possibly breaking the old one and pricing at today’s rates. To keep a low rate when moving, port first.
If the new home is cheaper and I need a smaller mortgage, is there still a penalty?
There can be. According to FCAC, if the new home needs a smaller loan than your current balance, the paid-down portion may still trigger a prepayment charge. When downsizing, have the lender quote this cost up front.
What is a typical variable-rate break penalty?
Usually three months’ interest on the outstanding balance — much milder than a fixed-rate IRD. Fixed rates are the greater of three months’ interest or the IRD, and the IRD tends to dominate when the remaining term is long.
How do I know if my mortgage is portable?
Check your mortgage agreement or ask your lender/broker directly. Not all products are portable, and even portable ones require re-qualification. Best to confirm this before you list your home so timing doesn’t catch you out.
Arthur Zhao
Real Estate Broker · FRI · ABR · SRS · PSA · MCNE · E-PRO · GUILD Elite
VP & Branch Manager, Bay Street Group Inc.
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