Is it worth it to break your mortgage when interest rates drop.? It depends, but in many cases, the answer is yes.

Watch my video or read on to find out if this is the right decision for you!

Why You Might Consider Breaking Your Mortgage

If you locked in your mortgage two or three years ago at a higher interest rate, and rates have since gone down, it might make sense to explore your options. If you break your mortgage, you’ll probably have to pay a penalty, but the long-term savings can sometimes outweigh the upfront cost. In some cases, you can recoup the penalty in just a couple of years, and come out ahead for the rest of your term.

Understanding Penalties If You Break Your Mortgage

When you break your mortgage, your lender will charge a penalty, usually calculated as an interest rate differential or three months’ interest. It’s their way of compensating for the lost revenue on your original contract. But if the new rate is significantly lower, you could still save money overall.

Run the Numbers Before You Decide

Let’s say your penalty is $5,000. If switching to a new mortgage rate helps you save that amount within two years, and you’ve got three or more years left in your term, then breaking your mortgage is worth exploring. Every situation is different, so it’s crucial to have a professional run the numbers.

Before you make any decisions, speak with someone who can help you evaluate the real costs and benefits of breaking your mortgage. I’d be happy to look at your numbers and help you decide whether it’s the right move.

If you’re looking to get pre-approved for a mortgage to buy a property in Edmonton, fill out my online application. I’m here to help you every step of the way.

About Jason Scott, Edmonton Mortgage Broker

Looking for a personalized mortgage solution? As an Edmonton Mortgage Associate, I’ll be your trusted partner who will help you get the right mortgage for your family home or Investment property. I’m Jason Scott, and I’ll be your Mortgage Broker in Edmonton.