Will breaking my mortgage early pay off?

9 hours ago

GUEST BLOG. Penalties may vary depending on the type of mortgage loan: variable rate or fixed rate.

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GUEST BLOG. Record low rates create a dilemma for many homeowners who are currently in a situation with higher mortgage rates and who are questioning the profitability of breaking their mortgage and reducing their interest rate. Does it make sense after paying all the penalties for early termination of the mortgage?

Determine your mortgage goals

The penalty is one of the first factors to consider. We must first of all determine our real needs and take the opportunity to increase monthly liquidity or consolidate certain debts at higher rates. A personal financial health check should be done at the same time in order to get the most out of it.

There may also be a need where breaking a mortgage loan may make sense even if it doesn’t save money. Improving your “cash flow” can be a valid reason to break your mortgage without necessarily talking about savings.

Sometimes it pays to take a slightly higher rate if that means a significantly lower penalty knowing that you plan to break your mortgage in the next few years.

When in doubt, it is imperative to seek professional advice who can examine your personal financial situation, your needs and offer you the best solution.

When to break your mortgage

Depending on the product, in variable, the cost of the penalty is relatively very similar throughout the mortgage term. For a fixed product, the cost might look like mountains and valleys as you approach the anniversary date of the loan.

It is necessary to make calculations which …

Malik Yacoubi

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