Mortgage renewal when you're planning to downsize soon
Real Mortgage Associates · FSRA #10464
If you'll sell within 3 years, choose a short-term (1–3 year) fixed or a variable-rate mortgage. Longer 5-year fixed terms trigger massive Interest Rate Differential (IRD) penalties on early break — often $10,000–$30,000+. The rate premium on a shorter term is almost always less than a penalty later.
How to approach your renewal
Match your term to your timeline. Selling in 12–18 months? Take a 1-year fixed or variable.
If you must have 5-year fixed for stability, ensure the mortgage is portable — you can move it to the smaller home without breaking.
Get the IRD calculation formula from your lender IN WRITING before signing anything.
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Jay Klair, Mortgage Agent Level 2 (M09000869) — Real Mortgage Associates, FSRA #10464, part of the DLGC Group of Companies · 5675 Whittle Rd, Suite 100, Mississauga, ON L4Z 3P8