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Pre-Paying a Mortgage before Discharge

Homeowners who break a closed mortgage before maturity will often make a pre-payment before the mortgage is discharged. 

The idea is to reduce the mortgage balance and thereby pay less of a pre-payment penalty.

It’s a great idea if you have the funds to do it. Remember, however, that lenders have different policies on how close to the payout date you can make a pre-payment.

Some lenders, for example, won’t allow pre-payments to be made within 30 days of the date of discharge (the date you pay off your mortgage in full).

Therefore, if you plan to pre-pay a portion of your mortgage to reduce your penalty, remember to do two things:

  1. Ask your lender how close to your payout date you can make a pre-payment and still have that payment count towards reducing your penalty. (Allow several days regardless. You don’t want to cut it too close.)
  2. Make the pre-payment and then confirm that your lender has applied it to your account before your lawyer requests the payout statement.  Otherwise, your pre-payment might not reduce your balance for the purposes of penalty calculation.


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Learn more:

Payout Statement

A statement given by a lender (mortgage holder) to the mortgagor (borrower) setting out how much must be paid to discharge the mortgage.

Payout Date

The date a mortgage is paid in full and discharged, thus releasing the borrower from all obligations and covenants contained in the mortgage.


The end of a mortgage’s term.

 (The comments contained on this site are for information purposes only and do not constitute legal advice.)  *Charlie is fictional character

If you have any questions/suggestion or require more information, please do not hesitate to contact me for buying or selling and also I will be happy to assist you negotiating your investment needs.

You can find the multiplexes/investment listings on webs sites as under



Vijay Gandhi,
Sales Representative- REALTOR®,
RE/MAX Dynasty Realty Inc. Brokerage*
C: 647. 267. 6338 (Direct-Leave message or text)
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