What's Your Break-Even Sale Price? How to Know If You Can Afford to Sell
Before you list, calculate the minimum price you need to sell your home to cover your mortgage, selling costs, and not lose money — the Canadian break-even selling formula.
What's Your Break-Even Sale Price? How to Know If You Can Afford to Sell
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