You bought a house just two months ago. On paper, everything looked perfect… but the reality turned out to be different: the children don’t like the new school, no one in the family likes the neighborhood, daily commutes are exhausting, and the initial enthusiasm quickly faded. When it’s not working — it’s just not working. And despite the huge expenses associated with the move, one thought increasingly echoes in your mind: leave as soon as possible.
However, breaking a closed mortgage so soon after its arrangement can be very costly. Bank penalties, notary fees, property transfer tax (the so-called “moving tax”), as well as realtor commissions — all of this must be taken into account before making a decision.
Cost of early mortgage termination
First of all, specialists advise contacting the bank and requesting a written calculation of penalties.
- With a floating interest rate the penalty is usually equal to three months of interest.
- With a fixed rate the greater of the two amounts is charged: either three months of interest or compensation for the difference in rates (IRD), calculated as the difference between your contractual rate and the current market rate for the remaining term of the loan.
Beneficial option: mortgage portability
The so-called portability of the mortgage allows you to transfer the existing loan to another property, keeping the current interest rate and avoiding penalties.
What to check:
- Availability of this option in the mortgage agreement.
- Approval of the new property by the bank (time frame — from 30 to 120 days).
- If the loan amount increases, the additional part is issued at the current rate.
- Appraisal and administrative fees may apply (from $200 to $600).
Insurance question
If the mortgage was insured (with a minimal down payment), the insurance coverage in some cases can be transferred to the new property with the same lender without paying a new premium. Generally, this option is provided only once. When changing banks, new insurance may be required.
Renting as an alternative to selling
Selling is not the only way out. Renting out the house can cover mortgage payments and some expenses (taxes, insurance, maintenance). Managing rental property requires time and organization, but for many, it becomes a reasonable temporary solution.
How to make a balanced decision
Experts recommend:
- Obtain a written calculation of penalties.
- Check the conditions for mortgage portability.
- Consider all expenses: penalties, notary fees, appraisal, property transfer tax, moving costs, realtor commission.
- Ask the realtor to assess the possibility of selling at a higher price, even if the house was bought just two months ago.
- Compare options: selling, mortgage portability, renting.
- Consult with a mortgage broker.
Don’t rush into radical decisions
Two months is too short a time to truly get used to a new home and neighborhood. Often, the stress of change is particularly strong at the beginning, but over time the situation may improve. Before breaking everything, it’s worth asking yourself: is this really an insurmountable problem or just a temporary discomfort that requires adaptation?
Helpful steps:
- Give yourself time — from three to six months.
- Help children find clubs, sports, friends.
- Get to know the neighborhood better: shops, parks, local communities.
- Make the house feel like home — renovations, decor, coziness.
- Establish social connections with neighbors and the school.
Sometimes that’s enough for the feeling of alienation to go away. And sometimes — to finally understand: it’s time to move on.
