Very interesting article on mortgage penalties and how not all lenders charge the same penalty. Its sometimes tough for clients to see past rate but there are a lot of features within a mortgage and factors that one should consider when apply for a mortgage and deciding on the institution to work with. A mortgage broker (a good one at least) can help navigate the process and help educate the consumer on these other determining factors.
A mortgage penalty is when you break your mortgage (pay it off) be it refinance or sale prior to the end of your agreed upon mortgage term. The article provides a penalty example and explains why different lenders may have different penalties. At times its because they simply can charge more, other times its because you are obtaining a lower interest rate but agreeing not to pay off the mortgage prior to the end of the term and many other reasons.
There are work around strategies, like porting a mortgage which we do a lot of or a mortgage assumption (I don't recall ever doing one) but nothing is better than understanding the mortgage contract you are entering into prior to signing the contract.
Feel free to read the article and let us know if you have any questions.