The most common situations that lead to a penalty (taux hypothecaire)

The most usual situations that will lead to a penalty

(This article is part of a group on the topic of mortgage penalties. There may be a topic that is of particular interest to you, you should check to see if it is specifically addressed in one of the articles. The entire list is included at the end of this article.)

Penalties charged by lenders on a mortgage loan that is paid off earlier than the maturity date can be avoided in some situations; in other situations, you may not have any choice in the matter.

The sale of your home: Selling your home does not mean that you automatically have to break your home loan contract and be subject to penalties (check if your mortgage is portable, for example), but if you are not purchasing another home, or are moving to another country, you will have to pay the pre payment penalty. There may be a solution; if you read our article How to lower or avoid a penalty?, you may be able to save some money.

Refinancing for debt consolidation:

Many people use the mechanism of mortgage financing in order to consolidate and lower their debt. It is a very good solution for most people, since it allows them to straighten up their financial situation. Sometimes, it is a very good idea to take out a second mortgage instead, especially if there is not a lot of time left on your original mortgage. You should contact a qualified mortgage broker, who can make all of the calculations to find the best solution for your individual situation: decide upon a second mortgage or refinance your existing mortgage.

Refinancing for renovations:

Usually when you do renovations, you will need additional funds in order to have the work done. If you are planning on renovating, here are three ideas that may help you save money overall:

There is some work to your home that may have to be done right away because it is urgent work. If this is your situation, you may want to consider taking out a personal loan or a line of credit instead of arranging a new mortgage. Once you do a new mortgage, the old loan can be incorporated into the new one and be paid off.

If you want to remodel your home, either to sell it, or so that you can get a higher price for it, you should think about an open mortgage to finance these types of renovations. With this type of home loan, you will not have to obtain a second mortgage, or incur prepayment penalties.

Don’t forget that if you want to renovate a home that you are going to buy soon, there are certain mortgages which have a renovation loan option. You can then borrow the money immediately for renovations you will do in the future.

Marriage separation: When married couples separate, it often happens that one of the partners will buy out half of the home from the other. When this happens, many banks will allow the new mortgagee to have a balance transfer rate for any additional funds

This is not always possible; the income of the partner taking over the mortgage may not be sufficient to procure a new mortgage. If you have such a problem, please contact our office to see if you can avail yourself of a specialized product called a self declared revenue loan to obtain the mortgage.

You will probably incur an early payment penalty, but you will have kept your home.

Executing a will: In the event of death, it is oftennecessary to sell a home. Certain lenders do not charge a penalty in these cases. You have to investigate.

Carefully consider your options

All mortgage decisions are critical, and you should take the utmost care to see if you have done everything you can to avoid a penalty. Sometimes it is completely unavoidable, but if you consult with a professional mortgage advisor who is accredited (CHA), you will surely find out the best options available.

These penalties cost thousands of dollars; it is certainly worth a home owners time to investigate the best way to reduce or avoid them.

Article Source: http://www.christiannotepad.com

Gregory is an Accredited Mortgage Professional (AMP). To get more information on mortgage rates - taux hypothecaire, please visit: Mortgages - hypothèque