Better Properties Real Estate Group

What would it cost to break your mortgage?

Selling before your mortgage renews can trigger a prepayment penalty. For some fixed mortgages it's a few thousand dollars. For others it's tens of thousands. See your likely range in two minutes, before it shows up on your closing statement.

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Your mortgage

Most of this is on your mortgage statement or your lender's app.

Rate type
Who holds your mortgage?
Big 5: RBC, TD, Scotiabank, BMO, CIBC. They often calculate penalties using posted rates, which can make them much larger.
If you have 2 years left, use your lender's current 2-year fixed rate. It's on their website, or ask them. Lower rates today mean a bigger penalty.
Many mortgages let you prepay 10 to 20% a year without penalty. Some lenders then charge the penalty on the smaller balance.
I know my lender's posted rate and my discount
Your discount is the posted rate when you signed minus the rate you got. It's sometimes on your mortgage commitment letter. With both numbers, the high end of the range gets much more precise.

Your likely penalty

Fill in your balance, rate, renewal date and closing date to see your range.

Get the exact number from your lender

Only your lender can give you the real figure. Ask for a payout statement as of your closing date. It's free, and you're entitled to it. Copy this and send it through your lender's secure messaging or email.


    

      
      
    

  






  
Ways to shrink or avoid the penalty

  
Ask your lender about each of these before you sign a listing agreement. Timing is easier to change early than late.

  

    

      
Port your mortgage

      
Many mortgages can move to your next home, keeping your rate and avoiding the penalty. Closing dates usually need to line up within a set window.

    

    

      
Blend and extend

      
If you're buying again with the same lender, they may blend your current rate with today's rate instead of charging a penalty.

    

    

      
Let the buyer assume it

      
Some mortgages can be taken over by a qualified buyer. In a high-rate market, an assumable lower rate can also make your home more attractive.

    

    

      
Use your prepayment privilege first

      
Paying down 10 to 20% before closing can lower the penalty at lenders that calculate it on the remaining balance. Confirm how yours works.

    

    

      
Time the closing

      
Penalties shrink as renewal gets closer, and many lenders let you renew without penalty in the last 90 to 120 days. A later closing date can save thousands.

    

    

      
Ask for a reduction

      
If you're taking a new mortgage with the same lender, ask whether they'll reduce or refund part of the penalty. Some will, but only if you ask.

    

  






  

    

      
The penalty changes your number. Let's plan around it.

      
Before you list, we'll look at your timing, your penalty range and your likely sale price together, so the cheque at closing is the one you expected.

    

    

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