Buying your next home
Already own and ready to move? A licensed mortgage professional helps you decide whether to keep your current mortgage or start fresh, time your sale and purchase, and use your equity for the next down payment.
Key points
- If you already own, buying your next home usually means deciding what to do with your current mortgage: take it with you, increase it, or replace it.
- Porting moves your rate and balance to the new home and can avoid a prepayment penalty.
- Bridge financing covers the gap if your new home closes before your current one sells.
- The equity from your sale often becomes your next down payment.
What’s different the second time
Buying a home when you already own one is a different exercise from buying your first. You’re juggling two transactions, a sale and a purchase, and you have an existing mortgage that has to go somewhere. Get the timing and the mortgage right and the move is smooth. Get them wrong and you can pay a penalty you didn’t need to, or carry two homes for longer than planned.
You also won’t qualify for first-time buyer programs like the FHSA or most land transfer tax rebates. In exchange, you usually have something first-time buyers don’t: equity.
What to do with your current mortgage
There are three main paths. Which one is cheapest depends on your rate, how long is left on your term and how much more you need to borrow.
| Option | How it works | Best when |
|---|---|---|
| Port your mortgage | Move your existing rate and balance to the new home | You like your current rate and the term has years left |
| Port and increase | Take your mortgage with you and borrow more, blended with today’s rate | The new home costs more and you want to avoid a penalty |
| Start a new mortgage | Pay off the old one and get a new mortgage on the new home | Your term is nearly up, or a new lender offers much better terms |
Watch the prepayment penalty
If you break your current mortgage instead of porting it, you’ll usually pay a penalty. On a fixed rate it can be several thousand dollars or more. Ask your lender for the exact amount and whether your mortgage is portable before you decide.
How NorthMerit can help
Tell us what you’re planning and we’ll connect you with one licensed mortgage professional who compares lenders for you. It’s free, and there’s no obligation.
Timing the sale and the purchase
Most people want the sale and purchase to close on the same day, so the money from one pays for the other. That’s not always possible.
Bridge financing
If you buy first, a bridge loan lets you use the equity in your current home before it sells. It’s short-term, often a few weeks to a few months, and costs more than a regular mortgage, so it works best when your sale is firm and the gap is short.
Selling first
Selling first removes the risk of carrying two homes, but you may need somewhere to stay between closings. A longer closing date on your sale can help line things up.
How your equity becomes your down payment
You sell your home for $700,000 and still owe $350,000 on it. After about $35,000 in selling costs, you have roughly $315,000 to put towards a $1,000,000 home.
Costs to plan for
Budget for real estate commission and legal fees on the sale, land transfer tax and legal fees on the purchase, any prepayment penalty, moving costs, and bridge financing if you need it. Because you’re buying and selling, many of these happen twice.
Mistakes to avoid
The most common one is breaking a mortgage that could have been ported, and paying a penalty for nothing. The second is buying firm before you know what your home will sell for. A mortgage professional can show you the numbers for porting, increasing and starting fresh side by side, so you can decide with the full cost in front of you.
Common questions
Can I take my mortgage with me?
What if I buy before I sell?
Do I need 20% down again?
Your next home starts with one conversation.
Tell us your plans and talk to one licensed mortgage professional. Free, with no obligation.
