A growing number of homeowners are asking about breaking mortgage early for lower rates (Getty Images)
A growing number of homeowners are asking about breaking mortgage early for lower rates (Getty Images)

Record low mortgage rates might make breaking your term early seem enticing, but the penalty costs will wipe out the potential savings.

Variable mortgage rates have fallen over the course of the COVID-19 pandemic, following a string of interest rate cuts by the Bank of Canada. Fixed rates are also lower because of market forces pushing bond yields lower. 

According to Ratehub, mortgage shoppers will find better deals on 5-year variable mortgages at around 1.6 per cent, compared to around 1.64 per cent for fixed. 

Unless you are able to renew your mortgage at more favourable rates, current homeowners are locked out of the potential savings. That leaves breaking your mortgage early.

Online mortgage agency Nesto says there’s been an increased interest in breaking early in 2020, especially in August.

“Before the pandemic, most users were sticking with their current lenders for close term renewals, while, during and after lockdown, most probably related to the market’s numerous fluctuations, they were more willing to shop around before the end of their term,” Nesto said in a new report.

“In other words, with rates at their current lows, homeowners are shopping around and willing to pay lender penalties to break their mortgages and change to lower rates for a new term.”

Penalty for breaking mortgage offset savings

By cancelling early, with new terms, a penalty will be added to mortgage payments or upfront if you prefer. That penalty, says Ratehub.ca co-founder James Laird, means it usually won’t be worth it because the penalties are so high that you won’t end up saving any money.

Based on current conditions of falling interest rates, lenders will base the penalty on an interest rate deferral.

“When rates today are

Jim Nash is proud as poop of his new $32-million maze of pipes and boilers on the outskirts of Pontiac.

Two plans for handling sewage, only one gets state’s OK

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“This is going to revolutionize how sewage is treated,” says Nash, the boss of Oakland County’s drains and sewers. 

Doesn’t excite you? Well, put on your COVID mask — it’ll cut down on odors we’ll encounter — and join a reporter and photographer as we tour a new way of handling everyone’s you-know-what.

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“We’re the first place in Michigan to try it and only the third in the nation,” Nash says on the tour.



a man standing next to a building: Oakland County Water Resource Commissioner Jim Nash, right, and Mike Daniels, plant manager, give a tour of the new Thermal Hydrolysis Processing facility (THP) in Pontiac. The plant transforms human waste into class A fertilizer.


© Mandi Wright, Detroit Free Press
Oakland County Water Resource Commissioner Jim Nash, right, and Mike Daniels, plant manager, give a tour of the new Thermal Hydrolysis Processing facility (THP) in Pontiac. The plant transforms human waste into class A fertilizer.

In tax dollars and energy, this new technology will save a you-know-what load, Nash promises. Plus, it’s good for the environment, turning the mountains of hazardous solids that come from sewage plants, which other plants must truck off to landfills, into a safe and beneficial fertilizer.

Before starting construction, Nash, who is Oakland County’s elected water resources commissioner, had to get state regulators to approve a sewage permit for his new-fangled chemistry set at the Clinton River Water Resource Recovery Facility (formerly the Pontiac Wastewater Treatment Plant).

At a site 30 miles away in Macomb County, the same regulators denied a sewage permit sought by Nash’s counterpart, Macomb County Public Works Director Candice Miller. It was for a sewage project of almost the same cost, around $30 million.

During heavy rains, Miller’s project aimed

The journey to financial independence (FI) requires a level of dedication, discipline and self-determination. That’s particularly true when you’re someone trying to reach independence in your early 30s or 40s.

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