I noticed that most lenders offer me an option to get a fixed-rate or a variable rate mortgage. What happens if I pick one and then change my mind and want to switch?
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What happens if I choose a fixed-rate or variable rate mortgage, but then want to switch?
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Featured Mortgage Rates articles on Kanetix.ca 
Even though you may have a mortgage that is amortized over 25 years you are not locked into your initial fixed or variable rate decision for 25 years. That’s the beauty of the mortgage terms. At the end of each term you can change your mind without penalty. If you change your mind mid-term however you’ll likely have to pay a fee for breaking your original agreement. If you can’t decide, some products allow you to go in on a variable rate and lock in to the fixed rate (the rate offered on that day) without penalty. A good broker will set you up with flexible options through correct product placement by asking the right questions in the first place.
Paul Sidhu, Principal Mortgage Broker at KTX Financial.
Neither Kanetix® nor the KanetixForum.ca is a mortgage broker or agent. Although this information has been passed along to you from KTX Financial through the Forum, we are not responsible for the opinions expressed by them. Mortgages can be complicated. When reading these answers, keep in mind each person’s situation is unique. Individual responses may vary depending on your lender, geographic location, and specific circumstances. If you have a similar situation, always speak with your mortgage provider, or a licensed mortgage representative, for terms and conditions that may apply to you.
Hi Paul,
We have a 5year fixed rate contract made in 2008. Since the recession, financial institutions offered a very low rate these days. Can we transfer our mortgage to another financial company without paying too much? OR can we renegotiate our contract without paying too much?
Hi Ofelia,
You are right, the rates are definitely lower than they were a year ago. Transferring or refinancing your mortgage should not be a problem. The only factor that would make it difficult would be the size of your mortgage penalty. You should contact your lender and ask for a “payout summary”. This will list all the costs associated with you breaking your mortgage early. From that number, we can calculate if it makes financial sense for you to break your mortgage or whether you would be better off staying in your current mortgage.
Paul Sidhu, Principal Mortgage Broker at KTX Financial.
Neither Kanetix® nor the KanetixForum.ca is a mortgage broker or agent. Although this information has been passed along to you from KTX Financial through the Forum, we are not responsible for the opinions expressed by them. Mortgages can be complicated. When reading these answers, keep in mind each person’s situation is unique. Individual responses may vary depending on your lender, geographic location, and specific circumstances. If you have a similar situation, always speak with your mortgage provider, or a licensed mortgage representative, for terms and conditions that may apply to you.
Most mortgage companies have three forms of penalties for breaking your mortgage early.
1. Fixed penalty – This is an amount set out in your contract could be any amount, usually between $10 000 to $20 000
2. I.R.D – Interest Rate Differential – Takes the rate you were given when you signed your mortgage and subtracts today’s posted* rate and is then multiplied by the remainder of your term (usually above $10 000) unless you are at the end of your mortgage or the rate of interest is higher today.
3. Three months interest penalty – Three months of your payments interest portion totaled together
*posted rate is the highest rate provided by the lender
Neither Kanetix® nor the KanetixForum.ca is a mortgage broker or agent. Although this information has been passed along to you from KTX Financial through the Forum, we are not responsible for the opinions expressed by them. Mortgages can be complicated. When reading these answers, keep in mind each person’s situation is unique. Individual responses may vary depending on your lender, geographic location, and specific circumstances. If you have a similar situation, always speak with your mortgage provider, or a licensed mortgage representative, for terms and conditions that may apply to you.