Renewing Your Mortgage? Don't Make This Costly Mistake If You Might Sell
Is your mortgage coming up for renewal? If there’s any chance you’ll sell your home in the next six months to a year, take 50 seconds before you sign anything. This one decision could keep thousands of dollars in your pocket.
The renewal trap
Many homeowners start thinking about selling right around the time their mortgage term ends. The bank sends a renewal offer, and the easiest thing to do is sign up for another five-year term.
The problem is that if you sell before that new term is up, you’ll likely pay a mortgage discharge penalty to break it. Depending on your balance and rate, that penalty can run into the tens of thousands of dollars.
As Kevin puts it, the bank cares about its own money, not yours.
What to do instead
If you’re thinking about selling in the near future, consider:
- A shorter term, such as six months or one year
- An open mortgage, which lets you pay it off without a penalty
Yes, you may pay a bit more in interest on a shorter or open term. But that’s often far less than what you’d pay to break a five-year mortgage early.
Plan your sale and your mortgage together
Before you renew, talk to a REALTOR® about your timeline and to a mortgage professional about your options. Coordinating the two can save you a lot of money.
Thinking about selling?
Kevin and the Right Choice team can help you map out the timing, so you keep more money in your pocket and less in the bank’s.
Call Kevin at 289-768-8382 or get your home value.
