Hello Monty, selling your house will mean your mortgage will have be paid off. In that case your mortgage should be ported to another property to avoid penalty. If there is no other property involved and your mortgage will just end up being paid off you could make one of your yearly pre-payment to help reduce your penalty. Most lenders will take into account any unused pre-payment privilege anyways so check with them before you go to your savings or investments to make that pre-payment. I hope this helps, if you would like to discuss anything in detail please do not hesitate to contact me at any time. Abraham Niyazi - Mortgage Agent - Lic#M08010640 - Centum One FInancial Corp - Lic 10758. Cell: 416-993-4082 Toll Free: 1-866-728-3708 x 115 http://www.centum.ca/abraham_niyazi/ I deal with 25 lenders and can do mortgages across Canada except Quebec.

There are two formulas bank use, the 3 month interest payment and IRD (Interest Rate Deferential). If the interest rate on the market is higher then your current mortgage rate then you pay 3 month interest only. If your mortgage rate is higher then the market rate then you will be charged using IRD formula which is higher. This way the banks protect themselves from loosing a client to a lower rate.

If you sell your home before your term is done you have the following two options. The first option is to transfer or port your mortgage to your next purchase. There is basically no fee for porting your mortgage. However if you are not porting your mortgage then you need to break your mortgage. Option two, breaking or canceling you mortgage could be very costly as there is a penalty to pay in order to cancel the mortgage.