(Note: This is only a part of a series of critical articles on the subject of mortgage penalties. You may have an issue that is better answered in one of our other articles. The complete list of articles is at the end of this article for your reference.)

Penalties charged by lenders on a mortgage loan that is paid off sooner than the maturity date can be avoided in certain situations; in other situations, you may not have any choice in the matter.

The sale of your home: Selling your home does not mean that you necessarily 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 going to buy another home, or are moving to another country, you will have to pay the pre payment penalty. There may be a solution; 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 may be better to take out a second mortgage, especially when there is not a very long time remaining before you have to renew your mortgage. It is better to contact a mortgage broker who can calculate the best answer for you: take out a second mortgage, or simply refinance immediately and pay the penalty.

Refinancing for renovations:

Generally, when you perform a renovation, you will need money to do it. If you are in a situation where you have decided to renovate, think about these ideas that will help you save money:

Certain work is urgent and requires immediate funds. In this case, it would be good to see if you can finance the work temporarily with a personal loan or a line of credit. In this case, you can do the refinancing when you have to renew your mortgage anyway.

If you are renovating 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 incur a prepayment penalty on that mortgage or when you get the second mortgage.

If there isa property that you plan on buying in the near future, but intend on renovating once you have bought it, you also have an option known as the renovation loan option. With this kind of loan, you can borrow money now for the renovations you will do once the house is purchased.

Marriage separation: In the case of separation, the most common practice is that one of the partners buys half of the home from the other partner. In this case, it is possible to request a balance transfer rate for additional funds.

Sometimes, this will not work because the salary of the one partner who wants to take over the mortgage is not sufficient 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 take advantageof a product called a ?self declared revenue loan? to meet your home loan needs.

You will probably have a penalty for breaking the loan contract, but you will be able to keep 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 any decision that will lead to a penalty, discuss your situation with an accredited mortgage counselor (CHA) to find out whether there is not an alternative solution.

It is, after all, thousands of dollars we are talking about; it is well worth your trouble to find out.