{"id":18365,"date":"2026-08-11T09:32:05","date_gmt":"2026-08-11T13:32:05","guid":{"rendered":"https:\/\/www.zolo.ca\/blog\/?p=18365"},"modified":"2026-08-11T09:35:25","modified_gmt":"2026-08-11T13:35:25","slug":"what-happens-to-your-mortgage","status":"publish","type":"post","link":"https:\/\/www.zolo.ca\/blog\/what-happens-to-your-mortgage","title":{"rendered":"Selling Your House With a Mortgage in Canada"},"content":{"rendered":"\n\n\n<p>Looking to sell your home but wondering how your existing mortgage will impact the sale? You are not alone; many Canadians sell their home with a mortgage for various reasons, such as moving to a new city, a change in family circumstances, or simply because their original home no longer fits their needs. Whatever the reason, yes, it is possible to sell your home with a mortgage in Canada, and there are multiple ways to do so, each with its own pros and cons.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"key-takeaways\">Key Takeaways<\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>You can pay off and discharge your mortgage early, port your mortgage to your new house, or allow the buyer to assume your mortgage<\/li>\n\n\n\n<li>It is essential to consider the financial implications before selling your home with a mortgage, as you typically incur penalties for breaking your mortgage early<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"3-ways-to-handle-your-current-mortgage-when-selling\">3 Ways to Handle Your Current Mortgage When Selling<\/h2>\n\n\n\n<p>There are multiple ways to sell your home with a mortgage, but the best option is dependent on your personal circumstances and whether you need a mortgage for a new property. Before you can figure out the best option for you, check your mortgage agreement for your maturity date, the remaining term and applicable penalties for breaking your mortgage.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-paying-off-debt-and-discharging-mortgage\">Paying Off Debt and Discharging Mortgage<\/h3>\n\n\n\n<p>For a quick, clean cut, you can pay off the remainder of your debt and discharge your mortgage. This could be an option if the proceeds from selling your home will allow you to pay off your mortgage loan. However, this also comes with additional costs, like mortgage discharge fees or penalty fees.&nbsp;<\/p>\n\n\n\n<section class=\"wp-block-zolo-related flex items-center py-6 leading-tight border-t border-b border-blacklight undefined\"><p class=\"font-serif pr-6 md:pr-12 mr-6 md:flex-shrink-0 border-r border-blacklight\">Related content<\/p><p class=\"related-link w-full my-0\"><a href=\"https:\/\/www.zolo.ca\/blog\/pay-off-mortgage-early\">Should I Pay Off My Mortgage Early?<\/a><\/p><\/section>\n\n\n\n<p>Mortgage discharge fees can cost up to <a href=\"https:\/\/www.canada.ca\/en\/financial-consumer-agency\/services\/mortgages\/mortgage-discharge.html\">$400<\/a>, depending on the terms and conditions in your contract. If you are working with a professional, such as a lawyer or notary, you may also need to pay professional fees ranging from $400 to $2,500. Finally, if you pay your mortgage before the end of its term, you may also have to pay a penalty fee, depending on your contract.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-porting-your-mortgage-to-a-new-home\">Porting Your Mortgage to a New Home<\/h3>\n\n\n\n<p>Option two is to port, or transfer, your mortgage to your new home. Porting your mortgage allows you to avoid the fees that come with breaking a mortgage, and also keep your existing interest rate, amortization period, and remaining term. If you currently have a low fixed-rate mortgage, keeping the existing rate from your original mortgage is beneficial, as it helps you save money on penalty fees and interest costs.<\/p>\n\n\n\n<p>If the mortgage amount for your new property is larger, your lender may offer you a \u2018blend and extend\u2019 option, allowing you to port the balance from the original loan and add additional funds through a new mortgage portion, often by blending your existing rate with a new rate.<\/p>\n\n\n\n<p>Keep in mind that not all mortgages can be ported, and some mortgage lenders may require you to qualify again before porting or increasing the loan amount.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-letting-the-buyer-assume-your-mortgage\">Letting the Buyer Assume Your Mortgage<\/h3>\n\n\n\n<p>Finally, you can let the buyer assume your mortgage. In this scenario, the buyer will assume your mortgage agreement, including the interest rate, remaining balance, and repayment term. This can be advantageous, as the buyer could inherit a mortgage rate lower than the current market rate. However, assumable mortgages are less common in Canada; as with porting, they are not always allowed and are subject to lender approval.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"costs-of-breaking-a-mortgage-early\">Costs of Breaking a Mortgage Early<\/h2>\n\n\n\n<p>The penalty for breaking your mortgage early depends on whether your mortgage is <a href=\"https:\/\/www.zolo.ca\/blog\/open-vs-closed-mortgages\">open or closed<\/a> and whether you\u2019re selling before your term ends. If you have an open mortgage, you can break it without a prepayment penalty. However, if you have a closed mortgage, which most people do, then you could be on the hook for thousands of dollars in fees, including:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Prepayment penalty<\/li>\n\n\n\n<li>Administrative fees<\/li>\n\n\n\n<li>Appraisal fees<\/li>\n\n\n\n<li>Reinvestment fees<\/li>\n\n\n\n<li>Mortgage discharge fees<\/li>\n<\/ul>\n\n\n\n<p>The penalty for breaking your mortgage will depend on whether you have a <a href=\"https:\/\/www.zolo.ca\/blog\/fixed-vs-variable-rate-mortgage\">fixed or variable-rate mortgage<\/a>. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"variable-rate-mortgage\">Variable-Rate Mortgage<\/h3>\n\n\n\n<p>If you break a variable-rate mortgage, the penalty is typically calculated as three months of interest, which is quite predictable. To calculate your penalty, you multiply the remaining mortgage balance by the interest rate, divide the fee by 12 to get the monthly interest amount, and then multiply that by three to determine the three months of interest.<\/p>\n\n\n\n<section class=\"wp-block-zolo-related flex items-center py-6 leading-tight border-t border-b border-blacklight undefined\"><p class=\"font-serif pr-6 md:pr-12 mr-6 md:flex-shrink-0 border-r border-blacklight\">Related content<\/p><p class=\"related-link w-full my-0\"><a href=\"https:\/\/www.zolo.ca\/blog\/what-is-a-mortgage-statement\">What Is a Mortgage Statement?<\/a><\/p><\/section>\n\n\n\n<p>For example, if you had $400,000 left on your mortgage and your interest rate was 3.95%, you would owe $3,949.98 as a penalty for breaking your variable-rate mortgage.<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li>$400,000 x 0.0395 = $15,800<\/li>\n\n\n\n<li>$15,800 \/ 12 = 1,316.66<\/li>\n\n\n\n<li>1,316.66 x 3 = $3,949.98<\/li>\n<\/ol>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"fixed-rate-mortgage\">Fixed-Rate Mortgage<\/h3>\n\n\n\n<p>In the case of fixed-rate mortgages, it\u2019s calculated as the higher of the Interest Rate Differential (IRD) or three months of interest. If you\u2019re still within the fixed term, the Interest Rate Differential can exceed the three-month penalty.<\/p>\n\n\n\n<p>To calculate the IRD, you need to determine the difference between your current interest rate and the rates that match the time on your remaining term. You then multiply the mortgage balance by the difference in rates, divide by 12 to get the monthly amount, and multiply that by the remaining mortgage term in months.<\/p>\n\n\n\n<p>For example, if you had $400,000 left on your mortgage with an interest rate of 4.95% and 36 months remaining on your term, you would first need to determine your lender\u2019s interest rate for a three-year term, which we\u2019ll say is 3.89%. In this case, the IRD fee is $12,719.88, which is higher than the three months&#8217; interest of $4,950.<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li>4.95% &#8211; 3.89% = 1.06%<\/li>\n\n\n\n<li>$400,000 x 1.06% = $4,240<\/li>\n\n\n\n<li>$4,240 \/ 12 = $353.33<\/li>\n\n\n\n<li>$353.33 x 36 = $12,719.88<\/li>\n<\/ol>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"financing-your-next-purchase\">Financing Your Next Purchase<\/h2>\n\n\n\n<p>If you are purchasing a new home while selling your current home, the same process applies, and planning the timing of the sale and purchase matters so you know how the closing dates will line up. You will still need to determine whether you can port your mortgage and if you need a larger mortgage for the new purchase.<\/p>\n\n\n\n<p>Some homeowners may need bridge financing or a <a href=\"https:\/\/www.zolo.ca\/blog\/what-is-bridge-financing\">bridge loan<\/a> when buying and selling homes at the same time. A bridge loan is a short-term loan that allows you to borrow money to close on your new home before you receive the funds from the sale of your previous home. Once you receive the funds from the sale, you pay off the bridge loan.<\/p>\n\n\n\n<p>It\u2019s also important to realize that you do need to requalify for a mortgage for the new property, and you may need to satisfy income and credit requirements again to qualify for the new amount. Just because you had one on your original home doesn\u2019t automatically guarantee you approval for another. Consulting with a mortgage broker is a smart decision, as they can help you find the best current rate for your new mortgage.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"how-does-selling-a-home-with-a-mortgage-work-on-closing-day?\">How Does Selling a Home With a Mortgage Work on Closing Day?<\/h2>\n\n\n\n<p>In Canada, your real estate lawyer will handle various aspects of closing. On a typical closing day, the lawyer will be responsible for transferring the funds, registering the home in the new owner\u2019s name, and handing over the keys and deed to the buyer.<\/p>\n\n\n\n<p>In cases where you have an existing mortgage, the real estate lawyer will still do all of the above, but before transferring the funds to you, they will pay off the lender, leaving you with the net equity.<\/p>\n\n\n\n<section class=\"wp-block-zolo-related flex items-center py-6 leading-tight border-t border-b border-blacklight undefined\"><p class=\"font-serif pr-6 md:pr-12 mr-6 md:flex-shrink-0 border-r border-blacklight\">Related content<\/p><p class=\"related-link w-full my-0\"><a href=\"https:\/\/www.zolo.ca\/blog\/home-closing-process-for-sellers\">House Closing Process for Sellers: What You Need to Know<\/a><\/p><\/section>\n\n\n\n<p>For example, if you sell your home for $600,000 and your mortgage balance is $350,000, you will pay $350,000 to your mortgage lender. In addition, you\u2019ll need to subtract any closing costs, real estate commissions and mortgage penalties and fees to calculate your profit. In this scenario, let\u2019s say $30,000. So, from the original $600,000 sale price, you will have a net profit of $220,000 after your lender has been reimbursed and the fees have been paid.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-what-if-i-sell-for-less-than-i-owe\">What if I Sell for Less Than I Owe?<\/h3>\n\n\n\n<p>If your mortgage loan is higher than your property&#8217;s value, it is known as negative equity or an underwater mortgage. This is rare in Canada, but it can happen if you bought during a market high. Should you sell your home for less than you owe on your mortgage, you will likely be responsible for paying the difference to your mortgage lender. However, you may be able to negotiate a short sale with your lender, but this will affect your credit score.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"bottom-line\">Bottom Line<\/h2>\n\n\n\n<p>Selling a house with a mortgage is standard practice in Canada, and as such, you have multiple options to deal with your mortgage. If you\u2019re <a href=\"https:\/\/www.zolo.ca\/blog\/downsizing-for-retirement\">downsizing<\/a> and ready to move into a home without a mortgage, you can pay off your loan balance. On the other hand, if you\u2019re purchasing a new property, you can bring your mortgage with you.<\/p>\n\n\n\n<p>Before you sell your home, <a href=\"https:\/\/www.zolo.ca\/how-much-is-my-home-worth\">determine your property&#8217;s value<\/a> and ask your lender for a mortgage payoff statement so you know exactly what breaking your loan will cost.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"selling-a-house-with-a-mortgage-faq\">Selling a House With a Mortgage FAQ<\/h2>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-can-you-sell-a-house-with-a-mortgage-if-you-are-in-the-middle-of-a-term\">Can you sell a house with a mortgage if you are in the middle of a term?<\/h3>\n\n\n\n<p>Yes, you can sell your house at any point during your mortgage term. However, doing so may trigger prepayment penalties, depending on the terms in your mortgage agreement. Before you decide to sell your home, it\u2019s smart to calculate the costs associated with breaking your mortgage.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-what-happens-if-my-house-sells-for-less-than-the-mortgage-balance\">What happens if my house sells for less than the mortgage balance?<\/h3>\n\n\n\n<p>If you sell your home for less than your mortgage balance, this is known as an <a href=\"https:\/\/www.zolo.ca\/blog\/underwater-mortgage\">underwater mortgage<\/a> or selling with negative equity. In Canada, you are still legally responsible for paying the shortfall to the bank. You will need to cover the difference out of pocket or speak with your lender about options.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-do-i-need-a-lawyer-to-sell-a-house-with-a-mortgage-in-canada\">Do I need a lawyer to sell a house with a mortgage in Canada?<\/h3>\n\n\n\n<p>Yes, you must use a real estate lawyer to legally close the sale, request the mortgage payout statement from your lender, and formally register the discharge of the mortgage title.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-how-long-does-it-take-to-get-money-after-selling-a-house\">How long does it take to get money after selling a house?<\/h3>\n\n\n\n<p>Your lawyer will usually receive and distribute the funds on closing day. Once the mortgage and real estate fees are paid, the remaining equity is typically deposited directly or sent to you via bank draft within 24 to 48 hours.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-what-is-porting-a-mortgage\">What is porting a mortgage?<\/h3>\n\n\n\n<p>Porting your mortgage means you move your existing mortgage, including its interest rate and terms, from your current home to your new home instead of taking out a completely new loan right away. This can help if the current market rate is higher than the rate you already have, though if you need to borrow more, your lender may charge a new rate on the extra amount.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<p><\/p>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Learn about prepayment penalties, porting your loan, and how the bank gets paid when you sell your home with a mortgage<\/p>\n","protected":false},"author":95,"featured_media":23342,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[48],"tags":[],"guide":[],"class_list":["post-18365","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-selling"],"acf":[],"zolo_excerpt":"","_links":{"self":[{"href":"https:\/\/www.zolo.ca\/blog\/wp-json\/wp\/v2\/posts\/18365","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.zolo.ca\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.zolo.ca\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.zolo.ca\/blog\/wp-json\/wp\/v2\/users\/95"}],"replies":[{"embeddable":true,"href":"https:\/\/www.zolo.ca\/blog\/wp-json\/wp\/v2\/comments?post=18365"}],"version-history":[{"count":13,"href":"https:\/\/www.zolo.ca\/blog\/wp-json\/wp\/v2\/posts\/18365\/revisions"}],"predecessor-version":[{"id":25699,"href":"https:\/\/www.zolo.ca\/blog\/wp-json\/wp\/v2\/posts\/18365\/revisions\/25699"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.zolo.ca\/blog\/wp-json\/wp\/v2\/media\/23342"}],"wp:attachment":[{"href":"https:\/\/www.zolo.ca\/blog\/wp-json\/wp\/v2\/media?parent=18365"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.zolo.ca\/blog\/wp-json\/wp\/v2\/categories?post=18365"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.zolo.ca\/blog\/wp-json\/wp\/v2\/tags?post=18365"},{"taxonomy":"guide","embeddable":true,"href":"https:\/\/www.zolo.ca\/blog\/wp-json\/wp\/v2\/guide?post=18365"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}