How To Get Out Of A Mortgage In Canada

There are several reasons why many Canadians discontinue their mortgage before its term ends. The major reasons are to save money through access to superior mortgage rates and services and to access improved equity in their home so they may be able to:

  • Disregard and/or merge bad debts
  • Acquire investment property
  • Pay for huge tickets like post-secondary education or home restorations

How to Break Your Mortgage

To know if breaking your mortgage is good, it is wise to seek help from a certified Mortgage Broker in Toronto. A certified mortgage professional will:

  • Do a free analysis of your current mortgage to determine the equity value that is currently available in your house.
  • Scrutinize the fine prints on the contract of your mortgage to know if there are early payout fees and penalties that will apply.
  • Complete the needed calculations and show a plan showing the benefits of your bottom line.

Below are crucial rules to decide if breaking your mortgage is worth it:

  1. If you will pay straight then you need to know if the interest you’re saving for the remaining term is greater compared to the penalty cost;
  2. If you will sum up the new mortgage and penalty cost, then you must ensure that the mortgage principal is less than or the same at the end of the remaining term;
  3. If you integrate the penalty to the new mortgage rate and the combined rate is much lower compared to the current rate, then you’re normally good;
  4. If your term is longer than five years, and you are through your fifth year, the three-month penalty will apply nor the IRD; this is according to the Canadian Law.

The precise terms written on your mortgage may determine if there’s value if you’ll break your mortgage. It’s sometimes worth the time to have a mortgage professional counsel you so you may have a better idea regarding your mortgage situation. And Rakhi Madan is an expert mortgage agent you can count on.