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Mortgage prepayment penalty calculator (2026)

Use Quebec’s 2026 Mortgage Prepayment Penalty Calculator to estimate how much it will cost to break your fixed or variable mortgage early. Compare penalties, understand IRD, and plan your next move with confidence.

James Virgo Jan 23, 2026 7 min read
Mortgage pre-payment penalty calculator

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

Note: This example shows a simplified IRD calculation for illustration only. In practice, lenders often use more complex formulas such as posted rates, remaining term comparisons, or declining balances. These can significantly increase the penalty.

Always confirm the exact calculation directly with your lender before breaking a fixed-rate mortgage.

Frequently asked questions

A mortgage prepayment penalty is the fee that your lender charges if you break your mortgage or pay off more than initially agreed during the mortgage term. A prepayment penalty is often triggered by extra payments, selling your home, or switching lenders. These penalties compensate the lender for the loss of interest income they would have earned over the full term of the loan.

It depends on the type of mortgage you have and the specific terms in your contract. For example, if you have an open mortgage, you can usually pay it off or break it at any time without a penalty. Lenders also often let you double up your monthly payments or make lump-sum prepayments, without a penalty, as long as you stay within the limits set in your contract. This can be extremely good to help you pay down your principal faster.

Prepaying your mortgage can save interest, but it isn’t always the best move. Large prepayments tie up your cash, making it harder to access later without refinancing. In some cases, especially when interest rates are relatively low, you may earn better after-tax returns by investing that money elsewhere. For example, if your mortgage rate is 4% and you can reasonably expect to earn more than 4% after tax through another investment, investing may make more financial sense than prepaying your mortgage.

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