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.

Powered by

I'd appreciate those who are familiar with canadian mortgages please. if a home owner has a 5 year fixed mortgage and one or two years into the mortgage sells his home but does not purchase a new one is he stuck with the penalties for paying off the mortgage early? my understanding is that on fixed mortgages in canada you are locked in for the full term. i also understand there are certain times you may make certain percentage lump sum payments but this does not include paying it off completely. is there a provision that if the home is sold and the existing mortgage is not transferred that the penalty for paying it off in full waived? i'm wanting to know if there is a general principle here.

Unfortunately not, the penalties cannot be waived, not unless you "port" the existing mortgage into another property. But that's not really getting it waived, you're just moving it from one security to another. Different lenders have different pre-payment privilege, but most have what they call 20/20, you can pre-pay up to 20% lump-sum of the original loan amount once per year only and it's non-cumulative. The other 20% is that of your monthly payments. These payments goes towards the principal and nothing goes towards the interest.

Powered by

I have original principal : 390,000,00 from td and they gave me two choices to make 1.fixed rate 3.90 5 years term total pyment 1761 and 2. variable rate 2.150 5 years term monthly payment 1322 i am in edmonton canada and i want to know which is the best option to chose right know i really think variable is best choice now. please give me your suggestion and your opinion thanks

If the loan term for each rate is only 5 years you must also have a balloon payment at the end of term. It would make more sense to get a longer term fixed rate as rates will certainly be considerably higher in 5 years. I suggest you sit back down with your mortgage broker and look for a third option.

Powered by

Im in my late 20's, buying first apartment. rbc wants to give me 4.04%, fixed, closed for 5 years. i have a high risk mortgage because i was only able to put down 15000 on a 255000 apartment and my mom had to co sign for me so she said this is the best she could do. we're having a meeting next week to discuss my options. but she did send me this email: "we touched on this briefly the other day...as of april 19th there was a change in the guidelines for anyone going through cmhc. those clients that do not qualify at the 5 year posted rate (before any discounts) have to take the 5 year term. you do not qualify at his rate..so you have no choice but to go with the 5 year rate." so does it sound like there is no way for me to change the rate? what if i want to go variable and open. if that's allowed, would you guys reccomend that. are the rates going to go up like i keep hearing or should i lock in. i'll take any advice. thanks.

4.04% from RBC is a fair and very competitive rate. New rules stipulate that if you are taking out a mortgage for anything shorter than a 5year fixed rate term then, no matter what rate and product you chose to go with (for example a 3 year fixed which would be at a lower) you still have to qualify based on your income at the bank of Canada's posted 5 year rate (which is much higher and harder to qualify for). Seems like you are doing OK with your offer from RBC.

Powered by

Ok, so i asked this question earlier but i did not make myself clear enough on one item as i had a lot of responses stating that i should not sell my home in this unstable market...which is true as i dont want to sell right now either. think about my question as if i was selling during a strong & solid sellers market. thanks to all that answered before and to those of you for your incoming insight. scott in canada: ok, so here is the issue at hand... i own a townhome in the province of bc which would sell today at 250k (this price is in tune with the current downturn in property value) this home is completely paid for ie mortgage free. i currently rent this bc property out i also own a condo in alberta (where i live) and owe $310k to the bank with a 5.04% fixed interest rate. the question is do i sell the rental in bc and take the 250k i would make and pay off the majority of what remains on the ab property which would leave me with only 60k to pay off? i plan on living for the next few years in ab and while having a long term rental property is great, i question what i will lose in interest payments if i keep both. what would you do?

Personally with today's economy if I could would sell it and get as far out of debt as I could in the long term think you would be better served . To much uncertainty in the market and the worlds economy. THink long term security. If renter leaves you are stuck at least with the taxes and upkeep (heat)