Published 21 September 2026 · By Jatin Dua, Broker of Record, RE/MAX Quantum Realty
When you sell, your mortgage is usually paid out from the proceeds on closing and discharged by your lawyer. Breaking it early can trigger a prepayment penalty: commonly three months’ interest on a variable, or the greater of that or the interest rate differential on a fixed. Porting may avoid the penalty.
When you sell, your mortgage has to go somewhere. Usually it is paid out and discharged from title on closing. Sometimes it moves with you to your next home.
Option 1: pay it out
Your lawyer requests a payout statement from the lender, pays the balance from the sale proceeds on closing, and registers the discharge. You receive what is left after commission, legal fees and adjustments.
Watch for the penalty
Breaking a mortgage before the end of its term can trigger a prepayment penalty. On a variable-rate mortgage it is commonly three months’ interest. On a fixed-rate mortgage it is usually the greater of three months’ interest or the interest rate differential, which can be much larger. Ask your lender for the exact figure before you list.
Option 2: port it
Many mortgages can be transferred to a new property if you buy within a set window. You keep your rate and avoid the penalty, and you may need to blend in new money for a larger purchase.
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Option 3: the buyer assumes it
Some mortgages are assumable with lender approval, meaning the buyer takes over your mortgage. It is rare, but can help if your rate is attractive.
Secured lines of credit
A home equity line of credit registered on title also has to be paid out and discharged, or the buyer’s lawyer won’t close. Tell your lawyer about every charge on title.
What to do before you list
- Request a payout statement and penalty estimate.
- Ask whether your mortgage is portable and on what terms.
- Time your sale around your term renewal if the penalty is large.
- Tell your lawyer about any other loans secured on the home.
The takeaway
Get a payout statement and penalty estimate before listing, ask about porting, and tell your lawyer about every loan secured on the home.
Talk it through with me
Get a first-time buyer plan
Tell me your savings, income range and target area. I will send a realistic price range and next steps.
I will come back to you personally, usually the same day. If it is urgent, call or text 833-330-1925.
Frequently asked questions
Do I have to pay off my mortgage when I sell my house?
Usually yes, from the proceeds on closing, unless you port it to a new home or the buyer assumes it.
Will I pay a penalty for selling before my term ends?
Often yes: commonly three months’ interest on a variable, or the greater of that or the interest rate differential on a fixed.
Can I take my mortgage to my new house?
Many mortgages are portable within a set timeframe. Ask your lender.
Who handles the mortgage discharge?
Your real estate lawyer, using the payout statement from your lender.
Sources
- Financial Consumer Agency of Canada — breaking your mortgage — prepayment penalties and porting
- Government of Ontario — land registration — discharges on title
Related reading
- Mortgage prepayment penalties: the two ways lenders calculate IRD, and why one of them costs five times more
- Porting Your Mortgage When You Move in Ontario: How It Works
- Bridge Financing in Ontario: How It Works When Your Closings Don’t Line Up
About the author — Jatin Dua, Toronto and GTA real estate broker
I am Jatin Dua, Broker of Record and co-founder of RE/MAX Quantum Realty Inc., Brokerage, Unit 101, 799 The Queensway, Etobicoke. I work with buyers and sellers across Toronto and the GTA, with deep local knowledge of the west end. Four-plus years of active GTA transactions and over $100 million in sales volume. Every market figure here comes from TRREB’s published tables and every rule from RECO or Ontario legislation, so you can check all of it without asking me.
Reach me at connect@jatindua.com or 833-330-1925, or book a call.