Yes, in most cases you do need to pay a penalty. The penalty is different for each bank. The usual scenario is when a ban would charge you 3 month mortgage interest which is about $1000 for every 100,000 borrowed. So if your mortgage is 400,000 you would be paying close to 4000$ in penalty to break the mortgage. If you sold your house and planing to buy another one, you should talk to you bank to see if they will be able to move the mortgage to another property which is called "porting". If the mortgage you require is bigger you can reapply to get a higher mortgage and could have a blend mortgage where your additional amount has a different rate then the original mortgage.

There is a penalty involved in breaking your mortgage before the term ends. The banks use two formulas to collect penalty when it comes to breaking the mortgage, the first formula is the mortgage interest of 3 month payments and the second one is Interest Rate Deferential or (IRD). For example; if the interest rate you have is lower then the available market rate then you will pay the 3 month interest to break the mortgage. If your rate is higher then the available rate on the market then the bank will calculate the penalty based on IRD which is much more expensive.

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Our neighbors to the north are just about the only developed nation that did not have a housing and credit crunch. what's been their key to averting disaster? were they just lucky?? no, they simply followed basic fundamentals. for example, canada requires that their banks have meaningful capital to deal with emergencies -- unlike our banks. in addition, their financial institutions are not permitted to make crazy 30:1 bets with leveraged money like we had aig, bear stearns and merrill lynch doing. on the question of mortgages, canada requires that homebuyers have a 30 percent down-payment. and you either must have the financial wherewithal to afford your monthly payment or you don't get the loan. as a result, their default rate has been less than one percent even in the midst of a worldwide housing meltdown. canada's banks never lowered their lending standards like ours did, either. our banks got to the point where they didn't care if you could pay your mortgage or not. why? they simply packaged your mortgage with others into securities and sold them off, making their money that way. the canadian lenders, however, never unloaded their mortgages en masse, so they had extra incentive to make sure they didn't make foolish loans. in related news, the british have a great idea about requiring banks to draw up a living will that outlines an insolvency plan at no cost to taxpayers. clark would love to see this in the united states. if banks fail to detail their exit strategy, they should get the immediate death penalty: a ban on any new business transactions; loss of fdic insurance; and their stockholders should be completely wiped out. and what's more, it's easy to point fingers at the politicians and the business sector and blame them, however it's more accurate to point fingers at those who bought properties they knew they couldn't afford. are you going to blame the dope dealers or the dopes who smoke it?

igloos are cheap???

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My wife and i bought a house in the us in 2008. i returned to canada in '09 and have worthwhile employment and have no intention on returning to the states in the near future. we have been renting our house for 60% of the mortgage payment and are living our lives on a tight budget. my wife lost her job in the states and collected unemployment benefits to which she was found to be claiming falsely and return paid benefits as well as 30% in fees and penalties. we cannot sell our house for what we owe and we cannot afford to pay back the unemployment. question being, if we claim bankruptcy in the us(shes a us citizen, i am canadian) would it effect our canadian credit? basically limiting us from owning a home here for 7 years or so.we have been working on her residency paperwork and might think bankruptcy may be reasonable after the fact it is to be granted. thank you for insightful comments we would like to avoid bankruptcy any way possible is there any other solutions other than bankruptcy that may be possible.

Yes it will and bankruptcy will not wipe away repaying unemployment. Fail to repay that money your wife goes to jail for fraud and Theft. Your credit history is now International information which all countries share