Discharging Your Existing Mortgage

It’s common for many people when selling their home to use the proceeds from the sale to discharge or pay off their mortgage loan. If you have a fully open mortgage you can discharge it at any time without penalty. However, if it’s a fully closed mortgage then discharging it may require you to pay substantial penalties. This is often in an amount that is equal to several months interest payments.

There are ways to avoid these penalties such as taking a portable mortgage with you when you sell your present home and applying it to the home you buy. Depending on your specific sales objectives you may be able to time the sales completion to coincide with the end of the mortgage term.

Mortgage "Portability"

The portable mortgage allows you to take your mortgage with you (without penalty) if you sell your present home and buy another one. This can be very beneficial particularly if the interest rate on your mortgage is lower than the market rates at the time of your move.

If your new home requires a larger mortgage amount the additional funds required can usually be furrowed at the current market rate. Portability can also enable you to avoid substantial penalties in discharging a closed mortgage when you sell your home.





Bridge Financing

If you are planning to buy your next home before the sale of your current home is complete, you may want to consider bridge financing. Bridge financing enables you to borrow an amount equal to, or less than, the net proceeds you are expecting to realize on your sale. The to use these borrowed funds to purchase your next home. When the sale on your current home closes you can use the proceeds to pay off the short-term bridge loan plus interest.

Tax Implications of Selling Your Home

Under most circumstances, you will not have to pay tax on any capital gain (the increase of your home's value) when you sell your primary residence.

Estimating the Proceeds from the Sale of your Home

Use this handy worksheet to help you estimate the proceeds that you will have remaining after the sale of your home.

Income
Sale Price $ __________________
Refund of pre-paid costs:
  Utilities $ __________________    
  Heating oil/propane $ __________________  
  Homeowner's insurance $ __________________  
  Real estate taxes $ __________________  
  Condominium maintenance fees $ __________________  
  Municipal assessments $ __________________  
Other Income $ __________________  
 
Total Income $ __________________ A
 
Payments
Balance of mortgage loan $ __________________  
Interest on mortgage since last payment $ __________________  
Mortgage prepayment penalty $ __________________  
Other lender fees $ __________________  
Real estate tax pro-ration $ __________________  
Real estate commission $ __________________  
Legal fees $ __________________  
GST on professional fees $ __________________  
Other payments $ __________________  
 
Total Payments $ __________________ B
 
Net Proceeds from Sale $ __________________ A-B


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Kayla Prior
  January 28, 2023

We worked with Kim to sell our home in summer 2021 and couldn’t have asked for a better experience. Kim’s invaluable insights and intimate knowledge of the market in the area meant we could confidently prepare and list our home even in the uncertain conditions that existed at the time. Kim’s personability also made her a delight to work with and I would be happy to recommend her to anyone!

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Bob Gill
  January 25, 2023

We were referred to Lori and the VanDinther Team when we needed some trustworthy advice when deciding whether to renovate and stay or look for a more suitable already renovated home. Lori and her team provided unbiased solid advice based on their wealth of knowledge and experience in our market area. I would highly recommend the VanDinther Team for any Real Estate need you may have.

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R L
  January 13, 2023

We had a very good experience with Kimberly. Her knowledge of the area is excellent and she provided honest and insightful advice about different locations. She was responsive to our preferences. We couldn't attend our second pre-closing visit so she went herself and provided us with a video walk through which was really helpful. Her recommendations for services in the area were also a nice touch.

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Shannon Ferr
  January 13, 2023

Kim was our realtor and she was great! She is very knowledgeable about the Hamilton area and seemed to have our best interest in mind when helping us find a home. Some realtors can be pushy on you to buy quickly so they can collect commission, but we didn’t feel that way with Kim at all. Kim made the experience as enjoyable as it could be as first time home buyers.

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