With all the news about the hot housing market and interest rates going up, you may be thinking about your mortgage. Should you go with a fixed or variable rate? Should you stay with your current lender or switch for a better deal? Short or long-term mortgage? And what are the costs of breaking my mortgage?
When people buy a home, they are not thinking of breaking their mortgage. But what if your financial situation has changed or your home no longer suits your needs? You may want to consolidate your debt to reduce your monthly payments.
What will breaking my mortgage cost me?
There are costs associated with breaking your mortgage contract.
The cost to break your mortgage contract depends on whether it’s open or closed. An open mortgage allows you to break your mortgage without paying a prepayment penalty. But if you break your closed mortgage contract, you normally have to pay a penalty that can cost thousands of dollars. You may also have to pay other fees such as administration fees, appraisal fees, reinvestment fees or a mortgage discharge fee.
There are penalties for breaking both fixed- and variable-rate mortgages, the penalties for breaking a variable mortgage are usually much lower at 3 months interest rate.
Read your mortgage contract or speak with your lender to find out the costs of breaking your mortgage