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 Anon, the best source for the penalty calculation is your bank. They have all the info on the system and the calculator built in to give you a very close estimate on the penalty to break. I say close estimate because in a lot of cases the penalty is only accurate on the actual day of payoff due to the effect that a change in interest rates may have on that penalty. If you want to calculate the penalty on your own here is how you can get at least a rough estimate on your own -> Paying off your mortgage before the term ends may require you pay a penalty but it is different for different types of mortgages. If you have an open mortgage it does not carry a penalty to break. If you are not sure if you have an open mortgage or closed mortgage, chances are you are in a closed mortgage. (Open mortgages have higher interest rates and are not often offered by lenders unless the client specifically asks for them due to the chances of breaking the mortgage) The exact calculations vary from lender to lender and are spelled out in the terms of the mortgage agreement you received when you set up your mortgage to begin with. The basics are as follows. For a variable rate mortgage you will most likely be charged 3 months interest penalty (The next 3 months interest due on your mortgage payments basically). If you have a fixed mortgage rate then things get tricky. You will be charged 3 months interest penalty or Interest Rate Differential (IRD). The first is the same as before but IRD is a whole different animal. It can get quite costly and is designed to prohibit movement of the mortgage to another lender due to a better rate environment. If the rates in the marketplace are higher than the rate you currently have on your mortgage you will be most likely charged the 3 month penalty. If the rate environment is such that rates are lower than what you have currently the IRD is often charged. The IRD compares how much money in interest you will save at today`s rates on your current mortgage balance and remaining term and that difference is the penalty to break. A step by step method is to use a mortgage calculator and input your remaining mortgage amount and your remaining mortgage term with the best rate available from your bank for the closest available term. The resulting interest paid to the bank over the remaining months is deducted from the interest you are expected to pay with your current mortgage, that difference is roughly your penalty. In this way clients don`t jump ship to another bank when the rates get better. I hope this information was helpful, if you or any reader would like me to do the calculations for them, no obligation, please don`t hesitate to call me at: 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. Please Google my name to access my various articles and videos on many mortgage related topics.

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I'm in a 5 year fixed mortgage with royal bank and have less than 2 years left in this term. i'm interested in buying a new house, and the bank told me it would cost $12,000 to break my current mortgage. i want to go with scotiabank and ask them to pay off my penalty. do you think they would do this?

A new lender will only lend mortgage funds based on the value of the property being purchased. You signed for a mortgage loan that has a prepayment penalty, therefore, if you refinance you current mortgage loan you have to pay the lender a penalty. Your new lender will not take on your prepayment penalty responsibility. I hope this has been of some benefit to you, good luck. "FIGHT ON"

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I believe that these bailouts are just going to post pone our crisis a few months or a few years at best! if people can't afford to pay their bills and mortgages what is going to suddenly allow them to pay their bills because the government owns the loans? nothing, the problem isn't that people overstepped their ability to pay, it's that gas prices went crazy and has effected everything, cost of living, driving, everything. i believe we have to fix the gas problem, and our energy problem at the same time. without fixing the energy crisis all the bail outs are going to fail, and send us into a huge depression. i own several small businesses, and as soon as gas prices hit $3.00+ a gallon sales dropped, and everything started going downhill. is it just me or what? neither one of these candidates really talked about fixing the energy crisis in the short term. they have talked about long term solutions (10 year plans). we need a immediate tax break or something now! whats your opinion?

The effects of the bail out bill and lowering of interest rates will not have a positive effect on the economy for at least 6 months. And with the shortage of consumer loans, the auto industry will crash next year, throwing 10's of thousands of people out of work. I don't want to sound pessimistic, but the global recession is on our doorstep.

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My fiance and i are getting married in a few months. i have always preferred living in an apartment and have always been able to have nice affordable surroundings, pay my own bills and have a little leftover for myself. my stb husband earns 25k to 30k more a year than i do. he has an older home he bought almost 25 years ago that he has for sale, but it's taking a lot of money to get it "marketable". he thought we should take advantage of the buyer's market and still proceed with purchasing a new home that would be both of ours. he has three sons age 22, 20, and 17. his house is smaller and although his 20 year old has moved out, the 22 and 17 year old will be living with us for some time yet. there just wouldn't have been enough room in his house to "fit" me in. note: we live in different cities and we decided i would be the one to relocate employment to his area, because he has 20 yrs in his company and retirement. in june we found our dream house and bought it, he handled the deal because of the distance that i lived away. we moved into our new home in august. we had pretty much figured out our finances and how each contributed to the home and expenses. what i didn't know at that time, is that he had decided to take a lower downpayment option on the mortgage. now the house payment is about $450 more a month than i planned my finances for. the problem is now i am expected to absorb that extra monthly cost, and i literally am broke every month now. he has the boys that cost more in groceries a week than i spent in a month. i pay the total cost for cable, internet service, garbage pick-up, and half the grocery bill. the cable and interent are a small fortune on four computer set-ups and 5 tv's. i use only one of each. it leaves me broke every month. stb husband though still has plenty of money left over after his contribution because he makes so much more than i do, (and i make a decent income). he's spending the excess of our orginal down payment to fix up his older house to sell, and is now planning to take any money made from that sale to invest in his interests and his 3 son's. (one son still in high school and two are making college a career, 3 years in and still not enough credits for an associates. they take about 4-6 credit hours per term). he seems to me to have less of a finacial burder now because i'm helping to absorb the cost of his two sons at home with us. he's been on a spending spree lately for his kids and himself. example: he just bought a new aqaurium set up and will have close to $1,700 in it and it's still not completed, while i've been scraping to save $350. to replace my treadless tires before winter. i managed to save enough this week and get them, but it left me broke. i never have even a little left over to spend on myself anymore for something small. sorry so long but i would like opinions. this week an exercise machine i've been waiting for has finally came in. where i use to live i went to the y. there is nothing around where we live now, and i commute 2 hours a day to my job until a transfer open up for me. so i don't have much time to go to the y the next town over. stb husband agreed that me buying a home gym was the best solution. now it's in, and i'm broke and maxed out from the new house expenses. the equipment is less than $600. i asked stb husband to give me some help and buy it and i could pay him back after the first of the year. he actually said ok but then declined this morning when we were suppose to pick it up. no reason. what is pi$$es me off is that, if i wasn't paying the extra that we never agreed to, i would have the $'s for my excerise machine. i'm not asking if it's right for me to do this, but rather is it fair under the circumstances this time to take the $'s out of what i would have paid this month and short it the $550, to go pick up my machine? that's the way i'm leaning right or wrong. i pay all my own expenses and a lot of what isn't mine. please give me your opinion. thanks for all the input. i talk with him this evening and put the budget on paper to show what i was paying out to the household based on my income and what he pays out...i think seeing those numbers on paper brought it home for both of us. it's time i adjust the percentage of what i contribute. it was more his preference to keep seperate accounts for awhile...however he has also brought up combining our accounts, which is ok with me as long as my contributions isn't paid out completely by him first. i think i will be giving serious thought and action on how this is worked out. we start pre-martial counseling this week, i think finances will be at the top of the list. thanks everyone for your take on my situation.

I've had two husbands and have never split the bills, the paychecks go into an account which is used to pay for expenses, necessities and things we need/want. I would rethink this relationship if you can't come to terms before you become so resentful you'll regret getting married. Good Luck.