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Summary:
The Mortgage Penalty Calculator estimates the break penalty you would owe if you exit your mortgage before the end of your term.
In Canada, fixed-rate mortgages use the Interest Rate Differential (IRD) method, while variable-rate mortgages typically use 3 months' interest.
Note: Mobile browsers have a simplified UI which may not contain all controls. For best experience, a desktop browser is recommended.
How to open the calculator:
- Navigate to the Calculators page using the main menu.
- Find Penalty Calculator in the list and click the calculator icon.
[Screenshot: Calculators page showing the list of available calculators]
Input Parameters:
| Parameter | Description |
|---|---|
| Borrowed Amount | The current outstanding mortgage balance. |
| Interest Rate (%) | Your current mortgage interest rate. |
| Comparable Rate (%) | The lender's current rate for a term matching your remaining term (Fixed only). |
| Term Left (Years) | The number of years remaining on your current mortgage term. |
| Mortgage Type | Select Fixed or Variable to apply the correct penalty formula. |
[Screenshot: Penalty calculator with Fixed mortgage type selected and inputs filled in]
Reading the Results:
For Fixed-Rate mortgages:
The penalty is the greater of:
- 3 months' interest on the outstanding balance at your contract rate, or
- IRD = (Your Rate ? Comparable Rate) � Outstanding Balance � Term Remaining
For Variable-Rate mortgages:
The penalty is simply 3 months' interest on the outstanding balance.
The results show which method applies and the estimated penalty amount.
[Screenshot: Penalty calculator results showing the penalty breakdown]
Tips:
- The comparable rate is provided by your lender � call them to get the exact figure for the most accurate result.
- Variable-rate penalties are almost always lower than fixed-rate IRD penalties.
- If you are at or near your renewal date, the penalty may be waived � check with your lender.
Additional Information:
- See the Payment Calculator help article to model a new mortgage after breaking.
- See the HELOC vs Refinance Calculator help article to compare refinancing options including the cost of the penalty.