Selling a Home with Mortgage in Calgary

Can You Sell a House with a Mortgage in Calgary?

Yes. Having a mortgage does not prevent you from selling your home. In most cases, your mortgage is paid out from the sale proceeds on closing day. Your lawyer handles this as part of the standard closing process.

Key Costs to Expect When Selling with a Mortgage

1. Mortgage Payout Amount

This is the remaining principal plus any interest owed up to the payout date.

2. Prepayment Penalties (If You Break Your Term)

If you sell before your term ends, your lender may charge a penalty. The amount depends on:

• Fixed vs. variable mortgage

• Time left in the term

• Your contract’s penalty formula

Even a “small” penalty can meaningfully impact your net proceeds, so it’s worth confirming early.

3. Discharge or Administrative Fees

Some lenders charge a fee to remove the mortgage from title.

4. Standard Selling Costs

These may include:

• Realtor fees

• Legal fees

• Moving costs

• Property tax adjustments

• Repairs or staging (optional but often high ROI)

Options to Reduce Mortgage Penalties

Depending on your lender and your next purchase timeline, you may be able to reduce or avoid penalties through:

Mortgage Porting

If you’re buying another home, some lenders allow you to transfer your existing mortgage to the new property. This can help you:

• Keep your current rate

• Avoid or reduce penalties

• Maintain your term structure

Porting rules are strict and time-sensitive, so this should be explored early if it’s a possible fit.

Early Planning

The simplest advantage is timing. A quick check of your mortgage term date can reveal whether:

• Waiting a short period could reduce penalties

• Your renewal window offers flexibility

• Your lender has special exception policies

How the Mortgage Is Handled When You Sell

When your home sells, your real estate lawyer will typically:

1. Request a mortgage payout statement from your lender.

2. Confirm the exact balance, including any fees or penalties.

3. Use sale proceeds to pay out the mortgage on closing.

4. Arrange for the lender to discharge the mortgage from title.

5. Distribute the remaining funds to you after closing costs.
   

This is routine in Alberta real estate transactions.

Selling a Home with Mortgage vs. Selling Without

Homes with mortgages sell the same way in the market. The difference is mostly in your closing math.

Your net proceeds are typically calculated as:

Sale Price
– Mortgage Payout
– Penalties/Discharge Fees (if applicable)
– Realtor Fees
– Legal Fees
– Adjustments
= Estimated Net Proceeds

If your mortgage balance is low relative to your home’s value, the process is usually clean and predictable. If it’s high, the planning becomes more important.

What If You Owe More Than the Home’s Value?

This is less common in Calgary than in some markets, but it can happen depending on purchase timing and equity position.

If your mortgage payout is higher than your expected sale proceeds, you may need to:

• Bring funds to closing, or

• Explore alternative strategies (timing, rental pivot, or professional financial guidance)

• This scenario requires early clarity before listing.
  

FAQ: Selling a Home with a Mortgage in Calgary

Do I need to pay my mortgage before listing?

No. You can list and sell normally. The payout occurs at closing.

Who pays off the mortgage?

Your lawyer pays it out using the sale proceeds.

Will my buyer know I have a mortgage?

Not typically. This is handled privately through the legal process.

How do I find out my penalty?

Request a payout statement or penalty estimate directly from your lender.

Can I still buy another home if I’m selling with a mortgage?

Yes. Many sellers coordinate a sale and purchase timeline, often using porting or bridge strategies depending on the situation.

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Questions about selling your mortgaged home?