Porting vs breaking your mortgage: which is cheaper when you move?

When you're buying a more expensive home: the blend

Most movers trade up, which means the new mortgage needs to be bigger than the one you're porting. Lenders handle this with a blended rate: your existing balance keeps its current rate, and the additional money you borrow is priced at today's rate, producing a single weighted-average rate on the combined amount (sometimes called blend-and-extend if the term is also lengthened).

This is generally a good deal when your existing rate is attractive — you protect that rate on most of your balance and only pay today's rate on the new portion. But run the numbers: if today's rates are higher than yours, the blend pulls your overall rate up, and if they're much lower, you might do better breaking entirely and taking the lower rate on the whole amount. The blend is a middle path, and whether it beats breaking depends on the spread between your rate and today's, plus how much extra you're borrowing.

When breaking beats porting

Porting avoids a penalty, but avoiding a penalty isn't the same as getting the best outcome. Breaking your mortgage and taking a fresh one can win in several cases:

• Rates have dropped a lot. If today's rate is well below your current rate, the interest you'd save over the remaining term can be larger than the break penalty — especially on a variable, where the penalty is just three months' interest. Our penalty estimate versus the rate savings tells the story. • Porting isn't practical. Maybe your sale and purchase can't close within the porting window, you no longer requalify, or your lender's port terms are restrictive. • You want to switch lenders or restructure — consolidate debt, change amortization, or move to a lender whose features suit you better. A port keeps you where you are; breaking frees you to shop the whole market.

The decisive number is always the same: penalty to break versus dollars saved on rate and structure.

The one comparison that decides it

Strip away the jargon and the choice reduces to a single side-by-side: the cost of porting (which is mostly your blended rate if you're borrowing more, plus any timing constraints) versus the cost of breaking (the penalty, offset by the savings from today's rate on the full balance). Sometimes porting is obviously cheaper; sometimes a big rate drop makes breaking the clear winner even after the penalty.

The trap is deciding on instinct ('I'll just port to avoid the penalty') without checking whether a lower market rate would more than pay for that penalty.

Know how your penalty is built. On a fixed mortgage it's usually the greater of three months' interest or the interest rate differential (IRD) (FCAC). Big banks typically calculate the IRD as your balance × (your contract rate − [today's posted rate for your remaining term minus the discount you got at signing]) × the years left. Subtracting that original discount lowers the comparison rate, which makes the IRD bigger. Many monoline lenders compare against their actual current rate for the remaining term instead, which usually produces a smaller penalty. We model both paths in dollars, factoring your exact penalty (we estimate the IRD on fixed mortgages, which is often large at the big banks), the rate spread, and your timing, then show you the cheaper route. If you're moving, talk to us before you commit to either — the right call is worth thousands. Read our porting explainer to go deeper.