Porting and assumption are two features of Canadian mortgages that can save (or cost) tens of thousands of dollars, depending on how the contract is written. Porting lets you move your existing mortgage — with its rate and terms — to a new property. Assumption lets a buyer take over your mortgage when you sell. Both features are common in marketing but less common in practice, because the contract conditions are narrow and the lender controls the process. Before you sign a five-year fixed, know whether you can actually use these features when life requires them.
What is a Porting and Assumption?
In a Canadian mortgage, porting is the right to transfer your existing mortgage (principal balance and rate) from one property to another during the term, without triggering a prepayment penalty. Assumption is the right for a qualifying buyer to take over your mortgage when you sell, with lender approval. Both features are contractual and vary widely between lenders. The Bank Act and the Financial Consumer Agency of Canada (FCAC) set baseline disclosure standards, but the specific porting and assumption rules are almost entirely a matter of the lender's terms.
Red flags to watch for
Down-sizing is a common reason to move, especially later in life. A 'same or higher value' porting rule blocks this and forces a payout at the posted prepayment penalty.
A narrow window (some lenders allow 90–120) creates risk on your buy-and-sell chain. If the new purchase is delayed, you pay the penalty anyway.
Rates may have moved. A re-qualification can fail, blocking the port and forcing a payout or sale. Confirm what re-qualification rules apply.
Blended-and-extended resets your term to a new 5-year clock at the blended rate, generally costing you more interest over time than 'blended to term'.
Sellers think assumption is an out. In practice, if the buyer doesn't qualify, you still pay the penalty and the sale can collapse.
Purely discretionary refusal makes the assumption feature largely decorative. Look for contracts that require approval to be reasonable.
If you remain liable after sale, a buyer's default can come back to you years later. Explicit release must be in writing.
Your legal rights
Canadian mortgage contracts are governed primarily by provincial law (the Land Titles Act in western provinces, the Registry Act in Ontario, the Civil Code in Quebec). Federally regulated lenders (banks) are subject to the Bank Act, the Financial Consumer Agency of Canada Act, and OSFI's Guideline B-20 (Residential Mortgage Underwriting Practices and Procedures), which governs the stress test applied on port/renewal. FCAC requires clear disclosure of prepayment penalties and the method of calculating them (Interest Rate Differential or three months' interest). The Interest Act (R.S.C. 1985, c. I-15) s.10 provides a statutory right to prepay certain mortgages at the 5-year mark with limited penalty — important when considering long terms.
Questions to ask before you sign
- 1What are the exact porting conditions — value, closing window, re-qualification?
- 2Is the blended rate 'blended to term' or 'blended and extended'?
- 3How is the prepayment penalty calculated if I can't port?
- 4Is this mortgage assumable, and what approval process applies?
- 5Will I be released from liability if the buyer assumes the mortgage?
- 6What fees apply to a port or assumption, and who pays them?
- 7Are there any rate premiums for accessing port/assumption features?
Disclaimer: This guide is for educational purposes only and does not constitute legal advice. Contract law varies by jurisdiction and individual circumstances. Always consult a qualified legal professional before making decisions based on this information.