Should I sell before my mortgage renewal?
Sell Now or Get Locked In? Should You sell before your mortgage renewal — the blunt answer you need.
Quick answer
Yes — sometimes. No — sometimes. The real question is: which scenario applies to you? Don’t guess. Use market data, mortgage math, and practical timing. Here’s how to decide fast.
Why timing matters
Mortgage renewal moves you from one interest rate to another. If rates at renewal will be higher than your current rate, your monthly payment can jump. If the housing market is hot and you have equity, selling before renewal can lock in profit and avoid higher payments. If the market is soft or penalties to break your mortgage are huge, staying may be smarter.
Simple decision checklist (3 minutes)
- Current interest rate vs forecasted renewal rate: Will your payment rise more than you can absorb? Calculate the difference.
- Home equity: Do you have at least 20% equity after commissions and closing costs? If yes, selling is less risky.
- Local market strength: Are listings selling fast with multiple offers? If yes, favorable to sellers.
- Portability & penalties: Can you port your mortgage to a new home or will you face a break penalty larger than moving costs?
- Life logistics: Do you need a conditional sale to buy your next home? Timing matters.
When selling before renewal makes sense
- You’ll face a large rate jump at renewal and need lower monthly payments.
- Local market is in your favor (low inventory, high demand).
- You plan to downsize or cash out equity to reduce debt.
- You can sell without huge penalties and can time a smooth closing.
When to hold off
- Penalty to break mortgage outweighs benefits.
- Market is weak and you’ll likely accept a lower sale price.
- You prefer to wait until your planned move date to avoid double moves or temporary housing.
Tactical playbook
- Get a market valuation now. Know your likely sale price.
- Talk to your lender about portability and exact penalty numbers. Get a written estimate.
- Run the numbers: sale price minus commissions/closing = net equity. Compare net proceeds to a projected monthly payment increase over 3–5 years.
- Build a timeline: list 60–90 days before desired closing. Coordinate closing date with purchase contingency if needed.
- Use contingency strategies: conditional sale offers, rent-back agreements, or bridge financing if you need time to buy.
Real-world example
If renewal moves you from 2.5% to 5% on a $500,000 mortgage, your payment could jump by hundreds monthly. If local market gives you a $50,000 gain on sale, you can eliminate the jump and still walk away with cash after costs.
Bottom line
Don’t make this decision on emotion. Use a clear checklist: market value, penalty math, and logistics. Selling before renewal is a powerful strategy when rates spike or the market is favorable. It’s a mistake when penalties and weak markets erase the gains.
For a direct, no-fluff assessment tailored to your property and renewal date, contact Tony Sousa for a quick consult. He’ll run the numbers, explain penalties, and map your timeline.
Contact: tony@sousasells.ca | 416-477-2620 | https://www.sousasells.ca
Published by your local Timing & Market Strategy expert.
