Planning to break or refinance your mortgage before the term ends? Estimate the penalty your lender may charge by comparing three months of interest against the interest rate differential (IRD).
Outstanding principal that will be paid off.
Annual percentage rate on your existing mortgage.
Use your lender’s posted rate or the rate they would offer today.
Number of months left in your current mortgage term.
Used to estimate your regular payment for context.
Likely Penalty
$0.00
Based on the higher of three months interest or the interest rate differential.
Likely charged: Three Months Interest
Three Months Interest
$0.00
IRD Penalty
$0.00
Estimated Regular Payment
$0.00
Interest Saved
Rate difference: 0.00%
Remaining term: 0 months
When you break a closed mortgage early, lenders typically calculate the penalty using two methods. The method that produces the higher amount is charged.
Adjust the inputs to match your contract and ask your lender which comparison rate they use for IRD. Some lenders reference their posted rates while others use discounted rates.
Penalties shrink as your remaining term gets shorter. If possible, negotiate a closing date closer to your mortgage renewal to minimize the cost.
Many lenders let you move your rate to a new home or blend it with a new rate, which can eliminate or reduce penalties.
Always request a written payout statement so you understand the exact amount, how it was calculated, and when it expires.
Use this calculator to compare scenarios and build a negotiation plan with your lender or broker.
