THE DAVISVILLE & LEASIDE INSIDER

THE DAVISVILLE & LEASIDE INSIDER

Thursday, April 28, 2011

How to 'break' a mortgage and not pay a penalty...

About four years ago, I renewed my mortgage and locked in for a 5-year fixed term at an interest rate of 5.2 per cent because I was worried about rising interest rates. I realized a couple years later that I had made a mistake and considered breaking the mortgage to get a lower rate. The problem was that the penalty was very high and I didn’t want to pay it.

Instead, I used a different strategy which involves using my home equity line of credit to make lump sum payments against my fixed rate mortgage. Essentially, I converted my high interest fixed rate mortgage to a low interest credit line by paying lump sums borrowed on my credit line until my mortgage was gone.

Here’s how I did it.....

Source: Moneyville.ca
By Mike Holman | Wed Apr 27 2011


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