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Terminology Tip

Breaking A Mortgage- “Breaking” a mortgage means paying off a mortgage contract completely before the end of its term. Before making this decision, the mortgagor needs to calculate what they would have to pay in penalties. As an example, the Financial Consumer Agency of Canada states that if you have a closed mortgage, the prepayment charge is equivalent to the greater of three months’ interest on the outstanding balance of your mortgage or the interest rate differential- an amount based on the difference between two interest rates.

Your mortgage broker can confirm all costs involved and calculate if it makes sense for the borrower to break their mortgage,even for a new loan with a lower interest rate.

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