I doesn`t matter if you break 3 years later or 6 month before the term ends. You will pay the same mortgage penalty, 3 month mortgage interest or Interest Rate Deferential penalty.

A little clarification to mortgagepro`s comment. It is true that you will pay a penalty regardless of the months remaining but the penalty could be drastically different between a 3 year and 3 month remaining term. There are 2 calculations that the banks use for penalties. 3 months interest calculation and Interest Rate Differential IRD. If the conditions are right 3 months penalty for 3yr or 3month term should be close. If the conditions are such that an IRD will be used to calculate your penalty then you are looking at a huge difference in penalty. Talk to your bank and they will calculate the costs involved for you. My suggestion is to consider a port of your mortgage. A port is where you move the mortgage term rate and balance to the new property with no penalties. You can straight port it (no change in any mortgage particulars). You can port increase where you need more money (term remains the same, higher mortgage amount and the rate is blended with todays rate). Or do a port reduction (same term, same rate, smaller mortgage amount required for new house, some penalty may apply but much less than a complete break). One last thing I should mention. Once you bank gives you your options please contact a Mortgage Agent to do some further calculations for you. Many people have benefited from switching to a new bank for their new home. This is especially true today where rates are much lower than any mortgage started over 2 years ago. In the end what you end up doing with your mortgage must depend on how much money you will save going forward. That should be your #1 priority, mortgages are very expensive over time, you have to find ways to minimize your costs. I would be happy to consult with you if you have any questions. Abraham Niyazi - Mortgage Agent - Lic#M08010640 - Centum One FInancial Corp - Lic 10758. Cell: 416-993-4082 Toll Free: 1-866-728-3708 http://www.centum.ca/abraham_niyazi/ I deal with 25 Banks/Lenders and can do mortgages across Canada except Quebec.

When you want to break your current fixed mortgage before the term is up, you will pay a penalty to the bank which is 3 month interest if the current market mortgage rate is higher then your or IRD formula will be used to calculate a penalty if your mortgage rate is higher then the current posted rate.