9 Reasons Why People Break Their Mortgages

Kelly Hudson • June 14, 2023

Did you know that 60% of people break their mortgage before their mortgage term matures? Most homeowners are blissfully unaware that when you break your mortgage with your lender, you will incur penalties and those penalties can be painfully expensive.


Many homeowners are so focused on the rate that they are ignorant about the terms of their mortgage.

o We call it being Blinded by the Rate.


Is it sensible to save $15/month on a lower interest rate only to find out that, 2 years down the road you need to break your mortgage and that “safe” 5-year fixed rate could cost you over $20,000 in penalties?


Check out my BLOG Mortgage Penalties – Ouch… How Much??

There are a variety of different mortgage options available. Check out my 9 reasons for a breaking your mortgage –which may help you avoid those troublesome penalties!


9 reasons why people break their mortgages:


1. Sale and purchase of a home

  • If you are considering moving within the next 5 years you need to consider a portable mortgage.
  • Not all of mortgages are portable. Some lenders avoid portable mortgages by giving a slightly lower interest rate.
  • Please note: when you port a mortgage, you & the new home need to requalify to ensure you can afford the “new mortgage” based on your current income and any the current mortgage rules.


2. To take equity out

  • In the last 5 years many homeowners (especially in Vancouver & Toronto) have seen a huge increase in their home values. Some homeowners want to take out some of the available equity from their homes for buying a rental property, renovations, travel etc.


3. To pay off debt

  • Life happens, and you may have accumulated some debt. By rolling your debts into your mortgage, you can pay off the debts over a long period of time at a much lower interest rate than credit cards.

o Once you are no longer paying the high interest rates on credit cards, it gives you the opportunity to get your finances in order.


4. Cohabitation; marriage; children

  • You and your partner decide it’s time to live together… you both have a home and can’t afford to keep both homes??? The reality is that you have one home too many and may need to sell one or both of the homes – to buy something bigger.
  • You’re bursting at the seams in your 1-bedroom condo with baby #2 on the way.


5. Relationship/marriage break up

  • 43% of Canadian marriages are now expected to end in divorce. When a couple separates, typically the equity in the home will be split between both parties.

o If one partner wants to buy out the other partner, they will need to refinance the home.


6. Health challenges; life circumstances

  • Major life events such as illness, unemployment, death of a partner (or someone on title), etc. may require the home to be refinanced or even sold.


7. Remove a person from Title/mortgage

  • 20% of parents help their children purchase a home. Once the kids are financially secure and can qualify for a mortgage on their own, many parents want to be removed from Title.

o Some lenders allow parents to be removed from Title with a Change of Covenant – you simply need to pay administration & legal fees.

o Other lenders say that changing the people on Title equates to breaking your mortgage – yes… there will be penalties.


8. To save money, with a lower interest rate

  • Mortgage interest rates may be lower now than when you originally got your mortgage.
  • Work with your mortgage broker to crunch the numbers to see if it’s worthwhile to break your mortgage for the lower interest rate.


9. Pay the mortgage off before the maturity date

  • YIPEE – you’ve won the lottery, got an inheritance, scored the world’s best job or some other windfall of cash!! Some people will have the funds to pay off their mortgage early.


Some of these 9 reasons are avoidable, others are not…


Mortgages are complicated… Therefore, you need a mortgage expert!


Give me a call and let’s discuss the best mortgage for you, not your bank!

Kelly Hudson

Mortgage Expert

Mortgage Architects

Mobile: 604-312-5009

Kelly@KellyHudsonMortgages.com

www.KellyHudsonMortgages.com


Kelly Hudson
MORTGAGE ARCHITECTS
RECENT POSTS 

Joint Tenants vs. Tenancy in Common – What You Need to Know When Purchasing a Home!

By Kelly Hudson • March 6, 2026
Decisions relating to real estate can have significant financial and legal consequences. Before deciding how to share ownership of what is likely one of the largest investments of your life, I recommend consulting a real estate lawyer. Many Canadians purchase property together — including spouses, common-law partners, family members, friends, and business partners. Because ownership structure affects estate planning, taxes, creditor exposure, and control over the property, it’s important to understand your options before you sign. In Canadian property law, there are two primary forms of co-ownership: Joint Tenancy Tenancy in Common While these terms may sound similar, they have very different legal and financial effects — particularly if one owner dies, sells their interest, separates, or faces creditor claims.

Reverse Mortgages in Canada: The Pros and Cons

By Kelly Hudson • February 18, 2026
If you’re 55 or older and own your home, chances are you’ve heard about reverse mortgages. Sometimes they’re described as a “retirement lifesaver.” Other times they sound risky or confusing. The truth? They’re neither magical nor terrible. They’re simply a financial tool — and like any tool, they work well in some situations and not so well in others – EDUCATION is the key! Let’s break it down in plain English. So… What Is a Reverse Mortgage? A reverse mortgage allows you to borrow money against the value of your home — without making monthly mortgage payments. Instead of you paying the lender every month, the interest gets added to the balance. The loan is typically repaid when: The home is sold You move out permanently Or you pass away In Canada, reverse mortgages are currently offered by: HomeEquity Bank (CHIP Reverse Mortgage) Equitable Bank Bloom Financial You still own your home and your name stays on title. That part often surprises people. How It Works (Simple Version) To qualify: You must be 55 or older You must own your home (you can still have a regular mortgage — it just needs to be paid out) You can usually borrow up to about 55% of your home’s value (the older you are, the more you may qualify for) You don’t make monthly payments. But you must continue to: Pay property taxes Keep home insurance in place Maintain the home The money you receive is tax-free. It can come as: A lump sum Monthly advances Or a combination of both That flexibility is one reason many retirees like this option. Why Do People Consider Reverse Mortgages? Most of the homeowners I speak with aren’t looking for luxury spending money. They’re trying to solve real life situations: Covering rising living costs Paying off debt before retirement Managing health or care expenses Staying in their home longer Helping adult children with a down payment For many Canadians, their house is their largest asset — but it doesn’t create monthly income. A reverse mortgage turns some of that home equity into usable cash. The Pros (The Reasons People Like Them) 1. No Monthly Mortgage Payments This is the big one. If you’re living on CPP and OAS, removing a monthly mortgage payment can dramatically reduce stress. Cash flow improves immediately. 2. You Can Stay in Your Home Most people I meet don’t want to move. They love their neighborhood. Their friends are nearby. Family visits often. A reverse mortgage can allow you to age in place instead of selling before you’re ready. 3. The Money Is Tax-Free Because it’s borrowed money — not income — it does not affect: Old Age Security (OAS) Guaranteed Income Supplement (GIS) That’s a major advantage compared to withdrawing from investments. There are no rules about spending. Some clients use the funds to stay in place – health care at home. Some clients renovate. Some travel. Some gift funds to children. Some simply create a safety cushion. It’s your equity – you decide. 5. You Keep Ownership The bank does not own your home. As long as you live in your home, maintain it, insure it, and pay property taxes — you own your home and can stay. 6. No Negative Equity Guarantee In Canada, reverse mortgages include protection so that you (or your estate) will never owe more than the home is worth — even if property values decline. That protection matters.