Our Blog

The Cost to Break your Mortgage
 May 9 2017     Posted by


Most homeowners should expect to pay a penalty if they want to break their mortgage to get a better rate or for a complete refinance.  Homeowners in 5 year fixed mortgages often look to break their mortgage during their 3rd year for debt consolidation or to accommodate changing life circumstances.

 

The penalty to break a mortgage is typically the greater of

  • three months’ interest, or
  • the interest-rate differential (IRD).

With the IRD, your mortgage lender will want you to pay the equivalent of what they will lose by releasing you from your mortgage and lending the money at current rates.  Unfortunately, not all lenders calculate IRD the same way so you should always get the actual penalty from your lender.  Check your lender’s website for their prepayment penalty calculator.

If you want to look at breaking your mortgage, we can review the terms and conditions of your mortgage and do an assessment of your situation to determine if your benefit outweighs the cost. There is no cost or obligation.  Often penalties are rolled into the new mortgage so you don’t have to be out of pocket. 

We are experts at providing the advice, education and resources that homeowners need. It pays to be informed, and we’re here to help!


301 Moved Permanently

Moved Permanently

The document has moved here.


Leave a Comment

Thank you for your comment! The blog moderator will review and approve.
Sorry, there was an error. Please try again later.
Blog Comment

Blog Post Comment

Required Icon required field.

Please remove the words "Delete Me" that you see below