Discharging Your Existing Mortgage

Many people, when selling their home, 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 yours is a fully "closed" mortgage, discharging it may require you to pay substantial penalties, often in an amount 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 sale's completion to coincide with the end of the mortgage term.

Mortgage "Portability"

A 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" Broadly speaking, bridge financing enables you to borrow an amount equal to (or less than) the net proceeds you are expecting to realize on your sale - and to use these borrowed funds to purchase your next home. When the sale on your current home closes, you 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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Monica Leoni
  June 21, 2022

Lori VanDinther and her team are dedicated professionals who love what they do and who make your experience a personal one. We had the pleasure of working with Melissa Uba recently and we could not be more grateful for her help. We are currently hosting two young Ukrainians in our home, who recently began the process of finding their own place to live in a very difficult and expensive Burlington market. Melissa handled the situation delicately and compassionately, getting to know the needs and realities of our guests first, and then catering her searches to meet them on every level. Melissa showed professionalism and empathy throughout, and made every viewing a positive and hopeful experience. We recommend her highly!!

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Wendy Walker
  May 27, 2022

Lori and her team are extremely professional and knowledgeable. In a changing market Lori and her team nailed it! The sale of my home went quickly and without any problems. The expertise in knowing the data in the market to their confidence in selling my home quickly and at a good market value was unprecedented. The communication with all team members from start to finish was fabulous. Thank you again for doing a fantastic job! Wendy Walker

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Danielle Lapointe
  May 11, 2022

I just bought my first home with Kimberly’s help! I can’t thank Kimberly and the VanDinther team enough. Kimberly was such a great help during an incredibly challenging seller’s market. As an out-of-town buyer, I really relied upon Kimberly’s knowledge and expertise, and I was so grateful that she was able and willing to do virtual tours with me. She has a fantastic understanding of Burlington and Oakville’s condo market, I felt really confident in the advice that she gave me. Working with a realtor who works within a team also proved to be a great benefit- when I expanded my search to Milton, Morgan was able to lead a virtual tour in a short turn around and I ended up finding my perfect first home. This team is great. I can’t recommend Kimberly enough and there is no doubt in my mind that I will work with her again when I am ready to look for my next home. Thank you!

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Lauren Wing
  April 30, 2022

We can't thank the VanDinther team enough for helping us persevere through a tough market and find a beautiful home. Morgan and Lori were were always available to organize showings, to provide market insights, and to give us the tools and support we needed to land a property we love. We so appreciate all of the work they did behind the scenes to provide us with an easy-to-navigate plan forward, often at short notice. We highly recommend Team VanDinther!

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