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.

Hello, I did a calculation based on your details above. The difference in monthly payment is $62 per month based on 5 year term that is a savings of $3720... But the savings does not stop there. The remaining mortgage balance at the end of the 5 year term is different for both rates, the difference is an additional savings of $1610. So a total savings of $5330! As for the penalty to break with your bank they are the best source of info for this. Give your branch a call and ask them what is the penalty if I pay off my mortgage completely in 30 days from today. That number should be less than the savings you see above. For other readers if your interest rate is higher than the 3.6% you see in this question then the savings is higher as well. I switched a mortgage for a client who had a higher mortgage balance and was at 5.7% interest rate (the rate at the time 3 years ago) He was quoted a penalty of $13,000 to break from his bank, after doing the calculations he did break and pay the penalty because he saved $33,000 over the next 2 years in interest. He almost tripled his initial penalty. There is no investment product that can return this kind of money into your pocket short of loan sharking!! The proof is in the numbers so I encourage anybody who is interested in at least looking into this please give me a call I can do the analysis and send you info for you to decide for yourself. It is not common knowledge so I must mention that at the end of the 25-30-35 year amortization of your mortgage you will end up paying double the amount or your original mortgage balance back to the bank in interest. I can help you find ways to minimize that, give me a call today. 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 Banks/Lenders and can do mortgages across Canada except Quebec.