Thinking about ending your mortgage early? You’re not alone. Many homeowners consider breaking their mortgage contract to take advantage of lower rates, better terms, or to access their home equity.

But before you move forward, it’s important to understand what’s involved.

Why Would You Break Your Mortgage?

There are a few common reasons people break their existing mortgage:

1. To Get a Lower Interest Rate

If interest rates have dropped since you locked in your current mortgage, switching to a new one could reduce your monthly payments and save money over time.

2. To Refinance or Consolidate Debt

You may want to tap into your home equity through a refinance, especially if you need cash for renovations, investments, or to consolidate high-interest debts.

3. To Sell Your Home or Move

Sometimes life changes, and so do your plans. Whether you’re upsizing, downsizing, or relocating, selling your home could mean needing to exit your current mortgage early.

What Are the Costs?

The biggest factor to consider is the break penalty. Lenders charge this fee to compensate for the interest they’ll lose when you end the agreement early.

There are two common types of penalties:

The penalty can range from a few hundred to several thousand dollars, depending on your rate and remaining term.

Is Breaking Your Mortgage Worth It?

Breaking your mortgage can be worthwhile if the savings from a better rate outweigh the penalty you’ll pay. To figure that out, you’ll need to compare the costs versus the benefits.

It also depends on how long you plan to stay in your home. If you’re refinancing into a much better rate and intend to stay put for a while, you may break even—or even come out ahead—sooner than you think.

What Should You Do First?

Before making a decision, it’s smart to:

Not Sure What to Do?

You don’t have to guess. I’ll help you review your current mortgage, calculate the penalty, and see if a switch makes sense for your goals.