Are you thinking about selling your home?
In B.C. $49.7 billion dollars worth of homes have sold across the province from January to September so far this year (B.C. Real Estate Association).
There are things to do before you list your home. A mortgage broker can look at your current mortgage, help you assess financing options and the costs of moving against the costs of staying, so you can make the best choice.
A mortgage broker will review your current mortgage to see what kind of fees are involved to breaking your mortgage. In some cases, these fees may be so high that it makes sense to put your move on hold until the future.
A Mortgage Broker Will Look At
What type of mortgage you currently hold
If you have a variable rate mortgage the penalty the lender charges you is usually three months worth of interest.
If you have a fixed rate mortgage you will have to calculate three months of interest and calculate the interest rate differential (IRD) and pay the greater of the two options. The IRD is calculated as the difference between the existing rate and the rate of the term remaining, multiplied by the principle outstanding and the balance of the term.
Some no-frills mortgages with very low interest rates may charge larger penalties. This could be up to three per cent of the principle or six months of interest.
How much is left on your term
One of the factors that affects your penalty is the size of your mortgage balance. The lender also looks at how far along you are in your mortgage term. This will affect which comparison rate your lender will pick for the IRD calculation.
Have interest rates been rising or falling
It makes a difference if interest rates have been rising or falling since you took out your mortgage. The lender will look at the difference between interest rates when you took out your mortgage, and the current rates, which are at an all time low. This is resulting in bigger mortgage penalties.
Why you should contact us
A Client First Mortgage Solutions mortgage broker can support you through this process. We are here to answer all of your questions. Remember before you list your home, we will help you determine if it makes sense to break your current mortgage. Contact us today!
Original Article – Global News