With my new zest to pay my mortgage down faster it made sense to do a little research in regards to the maximum allowed payments I could make on my mortgage without having to pay a mortgage penalty.
First of all, if you have an open mortgage (meaning you can pay down your mortgage whenever the heck you please and no one is going to bat an eye) this post doesn’t apply to you. If you have a closed mortgage (like most of us out there), you pay for a lower mortgage rate but there are more restrictions, such as not being able to pay down the mortgage whenever you please and having to pay a penalty for it. If you want to find out more information between open and closed mortgages and you’re out shopping for mortgages in the Spring Real Estate Frenzy season, check out this old but good Young and Thrifty post here.
Why it is Important to Know Your Mortgage Penalty
There are multiple reasons why you might want to know your mortgage penalty.
- You’re thinking of moving and you can’t port your mortgage
Or perhaps you don’t want to port your mortgage. As TM mentioned in that post, there are many different reasons when it makes sense to port your mortgage and many different reasons when it does not make sense to port your mortgage.
- You’re thinking of paying down your mortgage
This is the situation that I’m in right now. I have a lot of money in cash that I’m not really investing with. I am pondering about the Smith Maneuvre. I don’t want to pay too much of my mortgage down to trigger a penalty. I wanted to make sure that I was aware of the mortgage rules and how much I can pay down.
- You’re thinking of taking advantage of the lower interest rates