What's Your Break-Even Sale Price? Can You Afford to Sell?
Before you list, calculate the minimum price needed to cover your mortgage, selling costs, and walk away without losing money — the Canadian break-even formula.
Not every home seller is in a position of strength. If you bought near the peak, have a large mortgage, or have been holding for only a few years, you need to know your floor price — the minimum you must sell for to walk away without a loss. Listing without this number is a significant financial risk.
What Goes Into the Break-Even Calculation
Your break-even sale price must cover all of the following:
1. Mortgage payoff — Your remaining principal balance. Call your lender for a mortgage payout statement — it includes interest accrued to the projected completion date.
2. Prepayment penalty — If you're breaking a fixed-rate mortgage mid-term, the Interest Rate Differential (IRD) penalty can be substantial. Variable-rate mortgages typically pay only 3 months of interest.
3. Realtor commission — Typically 3.5%–5% of sale price + HST on the commission.
4. Legal fees — $1,000–$2,000 for the transaction.
5. Mortgage discharge fee — $200–$400 charged by your lender.
6. Renovation costs — Any money spent on the property that you want to recoup.
7. Outstanding property tax, condo fees, utilities — Arrears are deducted from proceeds at closing.
The Formula
Break-Even Price = Mortgage Payout + Penalty + Commission + Legal Fees + Discharge Fee + Renovations
Since commission is a percentage of the sale price (making it circular), the calculator solves this algebraically.
When You're Underwater
If your break-even price is above current market value, you face a shortfall — selling means you owe money at closing. Options in this situation:
- Wait — If the market may recover, holding may be better than selling at a loss
- Rent it out — Convert to a rental to cover carrying costs while waiting for equity
- Negotiate with your lender — In cases of financial hardship, lenders sometimes agree to a short sale
- Power of Sale / Foreclosure — If payments can't be made, the lender eventually takes control
Try the Calculator
→ Break-Even Selling Calculator
Official Resources
- FCAC — Selling Your Home — federal guide to selling and associated costs
- FCAC — Breaking Your Mortgage — prepayment penalty calculation guide
- CMHC — Selling Your Home — CMHC resources on selling and transitioning
- OSC — Understanding Mortgages — Ontario real estate transaction context