The most common situations that result in a penalty
Here are some situations:
Selling your home: Selling a home does not automatically mean that you should break your mortgage and pay a penalty (see if your mortgage is portable) but if you’re not going to buy another house or if you move outside the country, then you will pay the penalty. Prior to despair, take time to read the article How to reduce or avoid a penalty? for at least save a little.
Refinancing to consolidate debts: Consolidate debts by refinancing your mortgage can be a very good idea. It can help you get back on your feet financially. Sometimes it is better to take a second mortgage, especially when you only have a very long time before renewing your mortgage. It is best to contact a mortgage adviser who will compute
the best solution: either a second mortgage or simply refinance right away and pay the penalty.
Refinancing for renovations: Renewing often requires more money to work. Here are 3 ideas if you do refinance for renovations that could save you money:
- Some work is urgent and require immediate funding. In this case, it would be good to see if you can finance the work temporarily with a personal loan or line of credit. In this case, we will be able to refinance on your mortgage renewal.
- If you plan to renovating your home for resale faster or at a lower price, it is possible to refinance a mortgage open so you do not pay a second penalty when you sell or make a second mortgage for renovations.
- Do not forget that if you want to renovate the property you are going to buy soon, some mortgages have renovation loan options. You can then immediately borrow money for future renovations
Marital separation: During separation, the most common practice is that one partner buys the halves of the other partner, in this case, it is possible to apply a blended rate for the extra money.
In some cases, it is not possible because a person’s income is not sufficient to justify the new mortgage. If this is your situation, I invite you to contact our office to see if a special product ( returned self-declared) could not help you.
You’ll probably have to pay a penalty to break your mortgage but you’ll still have the house.
Executorship: When someone dies, it is sometimes necessary to sell a property. Some lenders do not charge a penalty in all cases. We have to learn.
While considering your options
Before making a decision that could result in a penalty, discuss your situation with an Accredited Mortgage Professional (AMP) to check if there is no alternative.
It is still a sum of several thousand dollars it’s worth checking though.