Mortgage, penalty, buying and selling
How the penalty is calculated, porting your loan, and buying and selling at the same time.
| Option | How it works |
|---|---|
| Repay at the sale | The notary repays your lender with the sale proceeds. A penalty applies if the term isn't over, plus discharge fees. |
| Transfer (port) | You keep your rate and terms for the property you're buying, according to your lender's rules and deadline. |
| Open mortgage | Repayable at any time without penalty, at a generally higher rate. |
| Wait for the end of the term | No penalty, if your timeline allows it. |
| Let the buyer assume it | If your lender agrees and the buyer qualifies. A low rate becomes a selling point. |
Understanding the penalty
- Variable rate: generally three months' interest.
- Fixed rate: the greater of three months' interest and the interest rate differential (IRD). Several major banks use an "adjusted" IRD, which is often higher.
| Example, $300,000 balance | Calculation |
|---|---|
| Three months' interest | $300,000 × 4.5% × 3 ÷ 12 = $3,375 |
| Standard IRD, 24 months remaining | $300,000 × (5.0% − 4.0%) × 24 ÷ 12 = $6,000 |
These examples show how the calculation works. Ask your lender for the exact amount, in writing, before you set your sale date.
Financing your next property
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Today's Best Mortgage Rates
Fixed rate
4.44%
3 years fixed* Variable rate
3.75%
5 years variable* *Subject to lender approval and applicable mortgage default insurance. Other conditions and restrictions may apply. Rate in effect as of today.