Prepayment penalty
How to break a Canadian mortgage and estimate the penalty (2026)
Most closed fixed mortgages in Canada charge the greater of three months’ interest or the interest-rate differential. On a $350,000 balance at 5.29% with 36 months left and a 4.29% comparison rate, three-month interest is $4,629, IRD (standard) is $10,500, so the estimate is $10,500. Variables are usually three months’ interest only. This is not your lender’s payout statement.
Rules verified: 2026-07-13 · Methodology
| Balance | 3-month interest | IRD (standard) | Estimated penalty |
|---|---|---|---|
| $250,000 | $3,306 | $7,500 | $7,500 |
| $350,000 | $4,629 | $10,500 | $10,500 |
| $450,000 | $5,951 | $13,500 | $13,500 |
| $550,000 | $7,274 | $16,500 | $16,500 |
Closed fixed, 5.29% contract vs 4.29% comparison, 36 months left. Same engine as the prepayment penalty calculator.
Live prepayment penalty calculator
Toggle fixed vs variable and standard vs posted-rate IRD. Request a payout statement before you act.
Open the live calculator with these numbersFrequently asked questions
How is a Canadian mortgage break penalty calculated?
Most closed fixed mortgages charge the greater of three months’ interest or the interest-rate differential (IRD). Variable-rate mortgages usually charge three months’ interest only. Your lender’s charge type and posted-rate method can change the IRD.
What is IRD?
Interest Rate Differential estimates the interest the lender loses if you break early: outstanding balance × (contract rate − a comparison rate) × remaining term in years. Big banks often use a posted-rate method that can produce a larger number than the simplified estimate.
Is this the same as my payout statement?
No. This is an educational estimate. Always request a formal payout statement from your lender before breaking or refinancing.
When do people break a mortgage?
Selling before the term ends, refinancing to pull equity, or switching products mid-term. If you are simply renewing at maturity, you are not breaking — see the renewal pages instead.
Educational only — not a licensed brokerage and not advice. Disclaimer · How we're paid.