Breaking Your Mortgage (and the Consequences of Doing So)

Sometimes, you might run into a circumstance where you need (or want) to break your mortgage. Breaking your mortgage means that you pay off the outstanding mortgage balance in full prior to the end of your term (for example, paying off your five-year fixed-rate closed mortgage three years into the term). This incurs a pre-payment penalty, which is either the equivalent of three months’ interest payments or the interest rate differential. The lender usually charges the greater of the two. Read more