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(Note: This article is part of a group of articles on the subject of mortgage penalties. It is possible that your question on penalties may be better answered in another article. The list of the other articles on penalties can be found at the end of this article.) There are penalties that are charged by lenders on loans that are paid off earlier than maturity. There are some cases where these types of penalties can be avoided. Of course, there are also situations where these charges cannot be avoided at all. The sale of your home: Selling your home does not mean that you automatically have to break your mortgage contract and be subject to penalties (find out if your mortgage is portable, for example), but if you are not purchasing another home, or are moving to another country, you will have to pay the pre payment penalty. Don’t despair; if you read our article How to lower or avoid a penalty?, you may be able to save some money. Refinancing for debt consolidation Refinancing your mortgage in order to consolidate your debt is often a very good idea. It can allowyou to get back on your feet, financially. Sometimes, it is better to take out a second mortgage, especially when you do not have a very long time remaining before you have to renew your mortgage. It is better to contact a mortgage consultant who can calculate the best answer for you: take out a second mortgage, or simply refinance immediately and pay the penalty. Refinancing for renovations: Usually when you do renovations, you will need additional funds to get the work done. If you are planning on renovating, here are three ideas that may help you save money overall: Some kinds of work are considered urgent and should be done immediately. When this is the case, you should see if you can choose the option of financing the renovation with a personal loan or a line of credit loan. When you renew your mortgage, you can include the renovations in that refinancing deal, and pay off the other loan. If you are updating your home so that it will sell, or sell for more, you may have the possibility of using an open mortgage to finance the renovation. In this case, you will not have a prepayment penalty on that mortgage or when you get the second mortgage. Don’t forget that if you want to renovate a home that you are going to buy soon, there are some mortgages which have a renovation loan option. You can then borrow the money right away for renovations you will do in the future. Marriage separation: If a couple separates, the most common occurrence is that one of the partners will buy out the home from the other. In this case, most banks do allow the new owner to merely have a balance transfer rate for any additional funds. Sometimes, this will not work because the salary of the one partner who wants to take over the mortgage is not enough to qualify him or her for a new mortgage. If you have such a situation, we suggest you contact our office to see if you can avail yourselfof a product called a “self declared revenue loan” to meet your home loan needs. You will still most likely incur an early payment penalty, but you will have kept your home. Executing a will: In the event of death, it is frequently]necessary to sell a home. Certain lenders do not charge a penalty in these cases. You have to investigate. Carefully consider your options Before making a decision that will lead to a penalty, discuss your situation with an accredited mortgage counselor (CHA) to learn whether there is not another solution. These penalties cost thousands of dollars; it is certainly worth a home owners time to investigate the best way to reduce or avoid them. Article Source: http://www.articlewheel.com
Gregory is an Accredited Mortgage Professional (AMP). To get more information on mortgage rates - taux hypothecaire, please visit: Mortgages - hypothèque
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