Can You Pay off a Mortgage Early Without Penalty?
Potential homeowners and borrowers who are researching and comparing the various home loan product offerings available to them may want to learn if they can pay off a mortgage early without penalty. Some types of home loans will allow a borrower to pay off their mortgage early without penalty, while others will unfortunately result in penalties if the borrower pays their mortgage off early.
Variable-rate mortgages are a type of home loan with an interest-rate that fluctuates over the life of the loan. This type of home loan can allow borrowers to pay off a mortgage early without penalty because of the risks the fluctuating interest rate can pose to both the home loan lender and borrower. If a borrower chooses to pay off their variable-rate mortgage early, they will not incur penalties or be required to pay various fees and charges for paying off the mortgage before the end of it’s terms.
Fixed-rate mortgages are a type of home loan that is a contract between the borrower and their home loan lender as well as the home loan lender and a wholesaler. The home loan lender borrowers funds from the wholesaler at a fixed price in order to give the borrower a fixed-rate. Should the home loan lender break the contract, they will incur a fee from the wholesaler. If a borrower pays off their mortgage early, they will incur break cost fees.
To learn more about variable and fixed-rate mortgages, reach out to the Mortgage House team of professional home loan lenders for further information as well as specialized assistance and advice throughout the application process.