Prepayment Penalty Calculator

Find out what it costs to break your mortgage early — Morty decodes the IRD formula so you don't have to.

Your Mortgage Details

Outstanding Balance

Your Contract Rate

Current Posted Rate (matching term)

Bank's posted rate for a term matching your remaining months

Remaining Term: 36 months (3.0 years)

Estimated Prepayment Penalty

$10,500

3.00% of your outstanding balance · Interest Rate Differential

3 Months\u2019 Interest

$4,629

Lower option

IRD Penalty

$10,500

Applied (higher)

Rate Differential

1.00%

5.29% − 4.29%

Remaining Term

3.0 yrs

36 months

How the IRD Formula Works

IRD = Balance × (Contract Rate − Posted Rate) × Remaining Years
IRD = $350,000 × 1.00% × 3.0
IRD = $10,500

Canadian lenders charge the greater of three months' interest or the IRD for fixed-rate mortgages. Variable-rate mortgages typically only have the three-month penalty. Some lenders use discounted rates for IRD, which can increase the penalty — always check your mortgage contract.

Morty warns: IRD penalties can be shockingly high when rates have dropped. If you're considering breaking your mortgage, ask your lender for an exact payoff quote first.