When we deal with our mortgages, there are three terms that we all come across: prepayment, portability, and assumability. They look like words we recognize, but in the finance world, they’re different than what you might think. So let’s go over them.


A prepayment is the payment of a bill or expense that settles the account before it becomes due. The nice thing about mortgage prepayments is that they allow you to pay off your principal faster meaning less future interest and faster total repayment.

Prepayments are something to ask your broker about because each lender is different. You might want to make an increase on your prepayments meaning you pay a little more each week or month depending on your payment schedule. You can also make a lump sum payment. Maybe you got a holiday bonus from work or a cash gift from a relative. You can throw that on your mortgage and get your debt paid quicker.


Portability means that you can sell your home and take your mortgage to a new home. One thing to remember about portability is that we can’t decrease the mortgage but we can increase it (often through a second mortgage or mortgage extension). Portability gives you the flexibility of being in control of where you mortgage is going and not having to break your mortgage every time you move.

Moving a mortgage to a new property avoids annoyances like discharge fees, legal costs, and the very real possibility of incurring a higher interest rate. Portability allows you to keep your (presumably good) interest rate for its full term rather than having to break and pay penalties halfway through.


An assumable mortgage allows a mortgage and its terms can be transferred from the current owner to a buyer. By assuming the previous owner’s debt, the buyer can avoid having to obtain their own mortgage.

Assuming a mortgage happens most often with parents and their children. Say your parents have a mortgage and you move into that house. Rather than you going out and getting a new mortgage and making your parents pay discharge fees, you can assume their existing mortgage. All you have to do is apply. One thing to note is that you still need to be approved on the mortgage’s remaining balance by a financial institution just like you would on any other mortgage.