Will I lose money if I sell my house after 5 years?

There is nothing forbidding a homeowner from selling a home after five years even with a mortgage. In fact, after only two years, the IRS provides you with a large capital gains exemption if the home meets primary residence requirements.

Do I have to pay early repayment charge if I sell my house?

As long as you stick to the mortgage deal you signed up to you won’t have to pay an early repayment charge. If you move home, you can port your mortgage deal rather than arrange a new one. That means, as long as your lender agrees, you can transfer your current deal to your new home without paying an ERC.

What happens to the equity in my house when I sell?

What happens to equity when you sell your house? When you sell your home, the buyer’s funds pay your mortgage lender and cover transaction costs. The remaining amount becomes your profit. That money can be used for anything, but many buyers use it as a down payment for their new home.

What is the 5 year rule for selling a house?

In the 5 years prior to the sale of the house, you need to have lived in the house as your principal residence for at least 24 months in that 5-year period. You can use this 2-out-of-5 year rule to exclude your profits each time you sell or exchange your main home.

How do I avoid paying ERC?

Tips for avoiding early repayment charges

1. Don’t exceed your repayment limit: make a note of your current limit and never go over this amount.
2. Choose a no-ERC mortgage: some lenders offer deals that don’t include early repayment charges.
3. Respect the ERC deadline: after a certain point ERCs will not apply.

How do I get out of paying ERC?

You can’t avoid paying the ERC unless you wait until your mortgage deal ends and no fee applies. However, if you’re switching mortgage to get a much better deal, you may find that over time the lower interest rate outweighs the cost of the ERC.