Assuming a Mortgage

Carola Signer • February 3, 2023

Assumability of a mortgage is a mortgage feature that allows a buyer to “take over” the original mortgage secured by the seller when buying their property. To assume a mortgage, all mortgage terms must remain the same, and the buyer has to qualify for the mortgage to the lender’s satisfaction. Typically, fixed-rate mortgages are able to be assumed, while variable-rate mortgages and lines of credit are not assumable. 


For example, let’s say you purchased a home for $500k with a $300k mortgage and $200k that you saved for a downpayment on a 5-year fixed at 2.5%. A year later, you needed to sell your property because you took a job in a new city. You could sell your property and allow the buyer to assume your mortgage. If interest rates are now sitting at 5% and the property is now worth $550k, and you paid the mortgage down to $250k, the advantage to the buyer would be that they could assume your mortgage for the next 4 years at half the interest rate. Of course, they would have to qualify for the mortgage and come up with $300k to complete the purchase. 


Advantages of assuming a mortgage


As outlined in the above scenario, assumable mortgages are an attractive option if interest rates have gone up and the seller has a lower interest rate than what is currently available in the market. If the mortgage is assumed, the buyer will benefit from a lower interest rate. Also, the seller could avoid paying a prepayment penalty for breaking the mortgage midway through the term. Potentially, there is a chance to save on legal costs as well. 


Drawbacks of assuming a mortgage


For the buyer, when you’re assuming a mortgage, all the terms and conditions of the mortgage must remain the same, and you have to qualify for the mortgage. You’ll be scrutinized the same way you would for a new mortgage, and you’ll be required to pay the difference between the property value and the mortgage amount from your resources to complete the sale. Secondary financing is not an option with a mortgage assumption. 


For the seller, one of the significant issues faced is when someone assumes your mortgage, should they default on the payments; depending on which province you’re in and the terms and conditions of the mortgage assumption, there’s a chance the lender can still hold you liable for the mortgage. This means even if someone assumes your mortgage, you could still be on the hook for payments should they stop making payments or default on the mortgage. 


While it is possible to assume a mortgage, the truth is that mortgage assumptions are pretty uncommon in Canada.

RECENT POSTS 

Co-Signing a Mortgage in Canada: Pros, Cons & What to Expect

By Carola Singer • April 15, 2026
Co-Signing a Mortgage in Canada: Pros, Cons & What to Expect Thinking about co-signing a mortgage? On the surface, it might seem like a simple way to help someone you care about achieve homeownership. But before you sign on the dotted line, it’s important to understand exactly what co-signing means—for them and for you. You’re Fully Responsible When you co-sign, your name is on the mortgage—and that makes you just as responsible as the primary borrower. If payments are missed, the lender won’t only go after them; they’ll come after you too. Missed payments or default can damage your credit score and put your financial health at risk. That’s why trust is key. If you’re going to co-sign, make sure you have a clear picture of the borrower’s ability to manage payments—and consider monitoring the account to protect yourself. You’re Committed Until They Can Stand Alone Co-signing isn’t temporary by default. Even once the initial mortgage term ends, you won’t automatically be removed. The borrower has to re-qualify on their own, and only then can your name be taken off. If they don’t qualify, you stay on the mortgage for another term. Before agreeing, talk openly about expectations: How long might you be on the mortgage? What’s the plan for eventually removing you? Having these conversations upfront prevents surprises later. It Affects Your Own Borrowing Power When lenders calculate your debt service ratios, the co-signed mortgage counts as your debt—even if you never make a payment on it. This could reduce how much you’re able to borrow in the future, whether it’s for your own home, an investment property, or even refinancing. If you see another mortgage in your future, you’ll want to consider how co-signing could limit your options. The Upside: Helping Someone Get Ahead On the positive side, co-signing can be life-changing for the borrower. You could be helping a family member or friend buy their first home, start building equity, or take an important step forward financially. If handled with clear expectations and trust, it can be a meaningful way to support someone you care about. The Bottom Line Co-signing a mortgage comes with both risks and rewards. It’s not a decision to take lightly, but with careful planning, transparency, and professional advice, it can be done responsibly. If you’re considering co-signing—or want to explore safer alternatives—let’s connect. I’d be happy to walk you through what to expect and help you decide if it’s the right move for you.

How Your Loans and Spending Habits Are Quietly Shaping Your Credit Score

By Carola Singer • April 10, 2026
Your credit score is one of the most important numbers in your financial life — especially when it comes to getting a mortgage. But for most Canadians, how that number actually gets calculated remains a bit of a mystery.