What Is A Mortgage Penalty And Why Do I Have One?
Firstly, mortgage penalties are the fees one will face if breaking a mortgage contract before the term is due. If you have a fixed-rate mortgage contract, chances are you would be facing a larger penalty to break the term early. Secondly, If you have a variable-rate mortgage, the penalty you are facing could be much less.
Breaking Your Contract Before The Maturity Date
There are many reasons a borrower will look to break their mortgage contract. If rates are decreasing you probably want to refinance to lock in a lower rate, but there are costs to refinancing. Whatever the reason might be, breaking your contract before the term is done will undoubtedly generate a mortgage penalty to be applied to your payout.
Breaking Your Term To Increase Cash Flow
It is important to contact your current lender and ask them for the penalty amount so you can factor that into your budget. Furthermore, you can sign a broker’s consent form and have your agent look into it for you. Nevertheless. you don’t want to be surprised with an unexpected penalty fee when signing the documents with your lawyer at closing.
Avoiding Your Mortgage Penalty
In conclusion, the only way to avoid your mortgage penalty is by not touching your mortgage. You could also remain with the same company/lender where you obtained the original contract mortgage. This situation would lower your penalty or decrease the amount given.
