Are There Penalties for Selling a Home in Ontario Early? | What You Need to Know
Are there penalties for selling a home in Ontario early?
Yes — if you’re still in your mortgage term, you may face a prepayment penalty. Sudbury realtor Tanya Vanden Berg explains what these penalties mean and how to plan ahead. (Always confirm details with your lender.)
When you sell before your mortgage term ends, your lender may charge a penalty for breaking the contract early. In Ontario, this penalty is usually three months’ interest or the interest rate differential (IRD). Fixed-rate mortgages often use IRD, which can be higher if interest rates have dropped since you signed your term.
Tanya encourages sellers to request a mortgage payout statement before listing. This document shows your remaining balance, any penalties, and the exact amount needed to close. Knowing this number upfront helps you avoid surprises and ensure the sale still makes financial sense.
Some sellers can avoid penalties by porting their mortgage, which means transferring their current rate and term to a new property. This can be a helpful option if you’re buying another home in Sudbury or moving within Ontario. Your lender can confirm whether you qualify.
If your mortgage term is ending soon, it may be worth waiting until renewal to reduce or eliminate penalties. Tanya helps sellers balance timing, equity, and personal goals to choose the best approach.
