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- When breaking your mortgage contract early, usually because of a refinance or the sale of your home, you will unfortunately have to pay your lender a penalty called a prepayment penalty.
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Calculate your prepayment charge and determine whether it is to your advantage-or disadvantage-to break your current closed mortgage. This quick calculator will show you how much it may cost to prepay your mortgage, in part or in full.
- Make Full Use of Your Prepayment Privileges
- Wait Until The End of Your Term to Prepay
- Port Your Mortgage
- Shop Around
Make full use of your prepayment privileges every year. Any future prepayment penalties will be based on a lower mortgage balance. Make a lump-sum prepayment before you break your mortgage. Some lenders restrict your ability to prepay if you’re close to the date you break your contract.
Consider waiting until the end of your term to prepay if your prepayment penalty will be a large amount. You can then make a lump-sum prepayment without penalty.
If you’re buying a new home, ask your lender if you can port your mortgage. This means taking your existing interest rate, terms and conditions with you to your new home. It saves you from breaking your mortgage contract and getting a new one. Learn about portable mortgages and how to choose the mortgage that is right for you.
Shop around when you renew your mortgage. Contact various lenders and mortgage brokers to check if there are better options that will offer you more flexibility.
You still have to pay your principal and interest amounts every month but you can make additional payments without having to pay a prepayment penalty (A penalty associated with a closed-term mortgage).
Nov 9, 2023 · A key factor to consider: if you have a closed mortgage and decide to break your mortgage contract before the agreed-upon term has expired, you’ll likely have to pay a prepayment...
If you pay off your outstanding balance before your term's maturity date, or pay an amount greater than your allowable prepayment privileges, you may have to pay a prepayment charge, depending on the terms of your mortgage or HELOC/TD Home Equity FlexLine.
Increase your payments. Increasing the amount of your payments, even by a small amount, helps you pay off your mortgage faster. You may only be able to increase your payments by a certain amount each year. Check your mortgage contract for the specific amount.
