Mortgage Blog
Everything about Breaking mortgage
July 16, 2024 | Posted by: Sarabjit Dhuna
Breaking mortgage means breaking the contract before amortization period. You will pay penalty or fees for breaking mortgage.
What do you want to Break mortgage?
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You want to switch from variable to fixed rate
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You want to move out from home or sell your home
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You want to get better lower rate than your current rate
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You want to pay off your mortgage.
Mortgage penalties: -
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When you break fixed-rate mortgage then you have to pay High IRD (interest rate Differential). Calculation for IRD is vary by lenders
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When you break variable-rate mortgage then you have to pay lower 3 months interest. Calculation for 3 months is simple. You just need multiply your interest rate by 3 months.
Examples of Breaking the Mortgage
For 3 Months interest
For example, Robin has Balance of 200,000 and monthly interest payment is 750 then 750 x 3 would be 2250.
For IRD
Mike has balance of 300,000 and remaining term is 4 years, original rate was 5.5 and current rate 4.5
IRD = 5.5 - 4.5% x 4 x 300,000 = 16,000
Alternatives for breaking the Mortgage
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HELOC
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Mortgage portability
If you are looking for Mortgage or have any questions regarding mortgage then Contact Sarabjit for more information or visit our website Centum United Mortgage
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