Mortgage Break Penalty Calculator
Mortgage Information
Penalty Calculation
Enter your mortgage details above to calculate the break penalty
Missing: mortgage balance, interest rate, mortgage type
* Disclaimer: The results from this calculator are estimates only. We base them on the most current information we have, including lenders’ publicly available calculation methods and real-world examples. Lenders can change their rules at any time, and the results do not account for special promotions or additional costs such as discharge, registration, reinvestment, or transfer fees. For exact figures, alwaysconfirm directly with your lender.
- BMO: 1-877-225-5266
- CIBC: 1-800-465-2422
- Desjardins: 1-800-224-7737
- First National: 1-888-488-0794
- HSBC: 1-888-310-4722
- MCAP: 1-800-265-2624
- National Bank: 1-888-835-6281
- RBC: 1-800-769-2511
- Scotiabank: 1-800-472-6482
- Simplii Financial: 1-888-723-8881
- Tangerine: 1-888-826-4374
- TD: 1-866-222-3456
How is the prepayment penalty calculated?
Lenders typically calculate the prepayment penalty one of two ways depending on if you have;
How to calculate the prepayment penalty on a variable rate mortgage?
If you have a variable mortgage, the penalty for breaking your mortgage mid-term is simply 3 months worth of interest payments. For example, if you have a $300,000 variable rate mortgage and the current rate is 5.14%, then the fee for breaking your mortgage mid term is calculated as:
$300,000 × 5.15% × (3 ÷ 12) = $3,863
Note that we do 3 divided by 12 since the interest rate is quoted annually.
How to calculate the prepayment penalty on a fixed rate mortgage?
If you have a fixed-rate mortgage, the lender calculates the penalty using the Interest Rate Differential (IRD). The IRD measures how much interest the lender loses because you are breaking your mortgage early instead of continuing to pay the agreed-upon rate. It is calculated as the difference between your current contract rate and the lender’s rate for a comparable term, applied to your remaining balance and time left in the mortgage.
For example, let’s say you have a $300,000 fixed-rate mortgage at 5.50%, and you have three years left on your term. If your lender’s current rate for a comparable three-year term is 4.00%, the Interest Rate Differential is 1.50%. The lender applies this difference to your remaining balance over the time left in your term to calculate the penalty. So in this case, this will be:
$300,000 × 1.50% = $4,500 per year
And the total penalty will therefore be:
$4,500 × 3 years = $13,500
Always confirm the exact calculation directly with your lender before breaking a fixed-rate mortgage.