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Buying Your Next Home & Moving Your Mortgage
Buying your first home is largely about getting into the market.
Buying your next home introduces another question:
What happens to the home and mortgage you already have?
You may be upsizing, downsizing, relocating or simply looking for a different property.
Whatever the reason, coordinating the sale of one home with the purchase of another can make the mortgage strategy more complicated.
Planning early can help you understand the equity available, possible penalties and financing options before you commit to another property.
What Happens to Your Current Mortgage When You Move?
Your mortgage does not automatically move to the new property.
Depending on the mortgage, you may have several possibilities:
- pay out the existing mortgage
- port it to the new property
- refinance
- arrange new financing
- blend existing mortgage terms with additional financing
Which option is available depends on your current mortgage contract and lender.
What Is Mortgage Portability?
A portable mortgage may allow you to transfer some or all of your existing mortgage terms to another property.
This can be particularly useful when your existing interest rate is attractive or when breaking the mortgage would result in a significant penalty.
Portability is not automatic.
The new property must normally satisfy lender requirements and you must still qualify for the financing.
There are also timelines and conditions that can apply.
What If the New Home Costs More?
If you are purchasing a more expensive property, your existing mortgage may not provide enough financing.
Depending on the lender, you may be able to port the existing mortgage and arrange additional borrowing.
Alternatively, replacing the existing financing with a completely new mortgage may make more sense.
The right decision requires comparing:
- existing mortgage rate
- potential penalty
- new mortgage rates
- mortgage features
- additional amount required
- remaining term
- future plans
Can You Buy Before You Sell?
Potentially. Some homeowners can qualify to purchase another property before their existing home is sold. However, carrying two homes creates additional financial obligations and qualification considerations. If your existing property has a firm sale but the closing dates do not align, short-term bridge financing may sometimes be available to cover the timing difference. Bridge financing is not the same as financing an unsold property indefinitely. Requirements vary by lender.
How Much Equity Will You Have?
Your home's sale price isn't equal to the cash you'll have available for the next purchase.
You need to subtract items such as:
- remaining mortgage balance
- mortgage penalty, if applicable
- real estate transaction costs
- legal costs
- other debts secured against the property
The amount remaining becomes part of the equity available for the next purchase. Understanding this number early can substantially improve your next-home planning.
Should You Keep Your Existing Mortgage?
Maybe.
A low existing mortgage rate can be valuable.
But rate alone shouldn't determine the decision.
A new mortgage could offer different penalties, prepayment privileges, flexibility or financing options that better suit the next property.
The complete mortgage should be compared.
Coordinate the Sale and Purchase
Your realtor, mortgage professional and lawyer or notary should understand the timing of both transactions.
Important dates include:
- sale completion
- purchase completion
- mortgage maturity
- financing deadlines
- possession dates
Poor coordination can create unnecessary financing stress.
Plan Your Next Mortgage Before Your Next Offer
You learned a lot buying your first home.
Your next purchase deserves an equally deliberate financing strategy.
Before listing, buying or making an offer, understand:
your available equity
your existing mortgage penalty
whether the mortgage can be ported
how much additional financing you may need
what you can comfortably afford
At Haystax Mortgage, we can help you look at the old mortgage and the new mortgage as one connected financial decision.
Planning your next move? Talk with Haystax Mortgage before you make the next offer. Find a Haystax Mortgage location here.
We work for you, not the banks, providing access to a wider range of mortgage options.
Banks offer only their mortgage products and rates. Unlike them, Mortgage Brokers have access to a variety of lenders, including banks, credit unions, monoline lenders, private financing, and more.
You're at HOME with Haystax!
Frequently Asked Questions
How much are closing costs in Canada?
FCAC currently recommends being prepared for approximately 1.5%–4% of the purchase price in upfront or closing costs. The actual amount depends on the province, municipality and transaction.
Are closing costs included in my down payment?
No. The down payment and closing costs are separate. Buyers should plan for sufficient cash to cover both.
What closing costs do first-time home buyers pay?
Potential expenses include legal or notary fees, land or property transfer taxes, tax adjustments, title insurance, inspections, appraisal expenses and moving-related costs. Available first-time buyer rebates vary by jurisdiction.
Do I need a lawyer when buying a home?
Legal requirements vary across Canada, but a lawyer or notary commonly handles ownership transfer, mortgage registration and other closing matters.
Can closing costs be added to my mortgage?
Many closing expenses need to be paid separately rather than financed within the standard mortgage. Certain mortgage insurance premiums may be added to the mortgage, depending on the transaction.
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