The Financial CollectiveBreak or stay — Is breaking this mortgage worth the penalty?
SG
Stephen GreenMortgage Broker · The Financial Collective
519-500-1789stephen@thefinancialcollective.cawww.thefinancialcollective.ca

Is breaking this mortgage worth the penalty?

The mortgage you have
What you have been offeredHow your lender works out the differential

This is the part that is not standardised, and it is the difference between an irritating penalty and a devastating one. It is in your mortgage commitment.

The other costs
What you entered
Balance owing$400,000
Your rate5.49% fixed
Months left in the term30
Amortization left22 years
Rate you could move to4.49%
Penalty comparedAgainst what you signed
Other costs to switch$1,500
Penalty added to the new mortgageNo, paid in cash
Staying is ahead by$1,829Over the 30 months left, counting what you pay and what you still owe. It does not turn positive before the term ends.
The penaltyThe differential is larger
Three months’ interest$5,490
Interest rate differentialA 1.00 point gap against 4.49%, over 30 months$10,000
You pay the greater of the two$10,000
What it costs to movePaid on the day
Penalty$10,000
Discharge, legal and appraisal$1,500
Cash needed on the day$11,500
Over the 30 months you have leftPayments made, plus what is still owed
Payment now$2,599
Payment after$221 a month lower$2,378
Cost of staying$452,661
Cost of breaking$454,491
Staying is ahead by$1,829
This is not a payout figureOnly your lender can issue one, and only for a short window. The differential depends on wording in your own mortgage commitment, and lenders do not all calculate it the same way — ask for your payout statement before you commit to anything.

A calculator cannot read your contract. It does not know which comparison figure your lender uses, what your prepayment privileges allow, or whether porting or a blend would beat breaking outright.

Talk to Stephen

Produced by Stephen Green, Mortgage Broker · Licence M23005021 · 519-500-1789

Illustrative only. These figures are estimates based on what you entered. They are not an approval, not a quote and not a commitment to lend; everything is subject to a lender’s own assessment and final terms.

TFC The Financial Collective Ltd. In Partnership with Better Mortgages — FSRA Licence 13496