60-Second Penalty & Refinance Savings Check
Want Rohit to verify your exact lender penalty and net monthly savings?
We check whether rolling your penalty into a lower-payment refinance genuinely leaves you ahead. No credit check to start.
1. Your current mortgage details
2. Fixed-rate IRD comparison settings
Fixed-rate penalties compare your current rate against the lender's rate for a term matching your remaining months.
If your contract rate is higher than today's rate for the remaining term, an IRD penalty usually applies.
3. Compare against your monthly refinance savings
Enter how much monthly cash flow you expect to free up by refinancing or consolidating high-interest debts to see your break-even timeline.
Estimated Prepayment Penalty
$7,000
Based on Standard Interest Rate Differential (IRD)
- 3 months' interest estimate
- $4,541
- Standard IRD (Monoline)
- $7,000
- Posted-Rate IRD (Major Bank)
- $15,750
At $850/mo in cash-flow savings, you recover this penalty in 9 months, leaving $13,400 in net cash-flow relief over your remaining 24 months.
Prefer the full application? Start standard pre-qualification
What to ask your current lender
Every Canadian lender uses its own exact formula and discharge fee schedule. Call your lender and ask for your exact written prepayment penalty and discharge fee as of today, then run our 60-second Refinance Savings Check so Rohit can compare the true net math for you.
Open Mortgage Refinance & Equity Calculator →Canadian Prepayment Rules · FCAC Guide
How 3 Months' Interest and IRD Mortgage Penalties Work
When you break a closed mortgage before your maturity date to refinance, access equity, or consolidate higher-interest debt, Canadian lenders calculate your prepayment charge based on whether your rate is variable or fixed.
Frequently Asked Questions: Mortgage Prepayment Penalties
- How is a mortgage prepayment penalty calculated in Canada?
- For a variable-rate closed mortgage, the prepayment penalty is typically three months' interest on the balance being prepaid. For a fixed-rate closed mortgage, the penalty is the greater of three months' interest or the Interest Rate Differential (IRD), which measures the gap between your contract rate and the lender's comparison rate for the time remaining in your term.
- Why do major banks often have higher fixed-rate IRD penalties than monoline lenders?
- Many monoline lenders and credit unions calculate IRD using a standard rate comparison: your contract rate minus their current offered rate for the remaining term. Major chartered banks commonly use a posted-rate discount method that incorporates the original discount you received off their posted rate when you signed, widening the rate differential and increasing the penalty.
- When is it worth paying a mortgage penalty to refinance or consolidate debt?
- Breaking a mortgage mid-term makes financial sense when your monthly cash-flow savings or interest savings exceed the penalty within a reasonable break-even window. For example, if consolidating $45,000 of 19.99% credit card and line-of-credit debt lowers your monthly outflow by $950/month and your penalty is $4,800, you recover the penalty in about 5 months.
- Can my prepayment penalty be rolled into the new refinance mortgage?
- Yes, provided the new mortgage balance (including the penalty and any balances being paid out) remains within the 80% Loan-to-Value (LTV) refinance limit of your home's appraised value and you qualify under the stress test.
- Is there a prepayment penalty if I wait until my mortgage renewal date?
- No. At the end of your mortgage term (maturity), you can switch lenders or refinance to access equity and consolidate debt with zero prepayment penalty.
Not an official payout statement. Rates and figures shown are illustrative, subject to change without notice, and are not an approval or a commitment to lend. Always request an exact payout statement from your current lender before breaking a mortgage term.