Port, Blend, or Break Your Mortgage?

Mortgage porting (or portability) allows you to transfer your existing mortgage to a new property without breaking your contract. You keep your current rate and remaining term and avoid a prepayment penalty on the amount you port. Porting windows are typically 90-120 days (RBC allows 120 days, Scotiabank 90), and lenders usually charge a processing or appraisal fee. If you need more money, the new funds are priced at today's rate and blended with your existing rate. If your new mortgage is smaller, normal prepayment charges usually apply to the difference.

Blend and extend lets you start a new, longer term before your current one ends, without a prepayment penalty. Your lender blends your current rate (for the months left in your term) with today's rate for the new term, and any new funds are at today's rate. In the Financial Consumer Agency of Canada's example, a 5.5% rate with 24 months left, blended with a 4% 5-year rate, becomes 4.6% for the next 60 months. Your lender must tell you how it calculates the blended rate, and you may pay an administration fee.

Breaking can make sense when: (1) Rates have dropped significantly since you locked in, so future interest savings exceed the penalty; (2) You're upsizing a lot and the blended rate doesn't save enough; (3) You have little time left in your term (a smaller IRD); (4) Your penalty is 3-months interest only (usually the case for a variable rate). Port when: (1) Your current rate is better than today's rates; (2) You can close within the portability window; (3) Your lender offers favorable porting terms.

For fixed-rate mortgages, lenders usually charge the GREATER of: (1) 3-months interest, or (2) Interest Rate Differential (IRD). IRD ≈ Balance × (Your Rate - Comparison Rate) × (Months ÷ 12). Big banks use their current posted rate minus the discount you received as the comparison rate, which can inflate penalties. For variable-rate mortgages, the penalty is usually 3-months interest only (no IRD), so they are often much cheaper to break. Always request an official penalty quote from your lender before deciding.

Big Banks (RBC, TD, BMO, Scotia, CIBC) calculate the IRD with their posted rate minus your original discount, which can make penalties larger; their porting windows are typically 90-120 days (RBC 120, Scotiabank 90). Monoline lenders (MCAP, First National, etc.) typically compare your rate with their current rate for the time left in your term instead of a posted rate, which often means a smaller IRD. Credit unions vary. Alternative/B-lenders often don't offer portability. Check your own mortgage commitment for the exact terms.

Breakeven Months = Penalty ÷ Monthly Interest Savings. For example: if your penalty is $12,000 and breaking saves you $400/month in interest (from a lower rate), your breakeven is 30 months. If you plan to stay longer than 30 months, breaking saves money long-term. This calculator shows total cost over your time horizon to help you decide. Always factor in your actual plans - if you might sell within 18 months, a 30-month breakeven makes breaking risky.