What Is Porting a Mortgage and How Does It Work?

Understanding Mortgage Porting When Relocating

Mortgage porting allows homeowners to transfer an existing mortgage, including its original interest rate and terms, from one property to another. While this option can offer financial advantages, its availability for conventional loans in the United States is generally limited. For most American homeowners, moving homes typically involves securing a new mortgage rather than porting an existing one.

Understanding Mortgage Porting

Mortgage porting allows a borrower to carry their current mortgage, with its established interest rate and remaining term, to a newly purchased property. This process is a modification of an existing loan agreement, aiming to preserve favorable terms, especially if current market interest rates are higher than the existing mortgage rate.

There are generally two types of porting: “straight porting” and “porting with a top-up.” Straight porting involves transferring the exact remaining mortgage balance to a new property of equal or lesser value. Porting with a top-up occurs when the new home is more expensive, requiring an increase in the mortgage amount. In such cases, the additional borrowing may come with a different interest rate, often resulting in a blended interest rate for the entire loan or a separate second mortgage. While the original interest rate and remaining term are carried over, the principal balance may adjust, and new terms might apply to any additional funds.

True mortgage porting, where a homeowner transfers their existing mortgage to a new property they purchase, is not a widespread practice for conventional loans in the United States. The closest equivalent in the U.S. market is an assumable mortgage, primarily available for government-backed loans such as FHA, VA, or USDA loans. In an assumable mortgage, a new buyer takes over the seller’s existing loan, including its terms and interest rate, rather than the seller porting their mortgage to their next home.

The Porting Process

The process of porting a mortgage begins with the homeowner contacting their current mortgage lender to inquire about the possibility and specific requirements. Even if a mortgage is technically portable, the lender will conduct a thorough assessment for the new property, including an application that evaluates the new property and the borrower’s updated financial situation.

The lender will initiate an underwriting process similar to a new loan application. This involves credit checks, income and debt-to-income ratio verification, and an appraisal of the new property to ensure it meets lending criteria. This reassessment confirms the borrower’s continued financial capacity and the new property’s collateral value.

Coordinating the sale of the old property with the purchase of the new one is a logistical consideration. Lenders typically impose a strict timeframe, often 30 to 120 days, within which both transactions must occur for the port to be valid. If the timing is not synchronized, the porting option might be forfeited. Once approved, the existing mortgage terms are formally transferred, and any new terms are integrated into the new loan agreement.

Eligibility and Lender Considerations

Not all mortgage products are eligible for porting; some fixed-rate mortgages may offer this feature, while specialized or certain variable-rate mortgages typically do not. The decision to allow porting rests entirely with the individual lender, who retains discretion to approve or deny the request based on current policies and risk assessments.

A borrower’s current financial standing is thoroughly re-evaluated during the porting application. Lenders assess income stability, debt-to-income ratios, and credit scores to ensure the borrower still meets affordability and credit criteria for the new property. A decline in credit score or a significant change in income or debt could result in denial.

The new property must also satisfy the lender’s appraisal and lending criteria, ensuring it provides adequate security for the loan amount. The timing between selling the current home and purchasing the new one is crucial; most lenders require these events to occur within a specific window, such as 30 to 120 days, to maintain continuity.

Costs and Financial Adjustments

Even when porting a mortgage, homeowners might encounter several costs and financial adjustments. An appraisal fee for the new property is typically required, often ranging from $300 to $600. Legal or conveyancing fees are also incurred for the transfer of the property title and the registration of the new mortgage, which can range from several hundred to a few thousand dollars.

Other potential fees include discharge fees for releasing the lien on the old property and registration fees for recording the new mortgage. While a specific “porting fee” is uncommon, some lenders may assess an arrangement fee for processing the new mortgage agreement. Mortgage broker fees would also be a consideration.

If the new property requires additional borrowing, the original mortgage amount would be ported, but the additional funds might be subject to a different, potentially higher, interest rate, leading to a blended overall interest rate for the entire loan. If the porting process does not complete successfully, or if a homeowner downsizes and pays off a substantial portion of the original mortgage beyond allowed prepayment privileges, early repayment penalties could apply. These penalties typically range from 1% to 5% of the outstanding balance repaid prematurely. If the loan-to-value ratio changes significantly for the new property, new mortgage insurance may be required, adding to ongoing costs.