Buyer Tools
Mortgage Refinance Calculator Canada — Break-Even After Penalty
Calculate whether it's worth breaking your Canadian mortgage early. See your prepayment penalty (IRD or 3-month interest), monthly savings, and break-even timeline.
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Frequently Asked Questions
What is the prepayment penalty for breaking a fixed-rate mortgage in Canada?+
For fixed-rate mortgages, Canadian lenders charge the greater of three months' interest or the Interest Rate Differential (IRD). The IRD is calculated as the difference between your contract rate and the lender's posted rate for the remaining term, multiplied by your balance and time remaining. IRD penalties can be significant when rates have dropped.
What is the prepayment penalty for a variable-rate mortgage in Canada?+
Variable-rate mortgages typically carry only a three-month interest penalty, making them much cheaper to break than fixed-rate mortgages. This is one of the key advantages of variable-rate products during periods of rate uncertainty.
When does it make sense to break your mortgage and refinance?+
Refinancing makes sense when your monthly savings from a lower rate recoup the prepayment penalty within a reasonable timeframe — typically before your remaining term expires. If your break-even point is 18 months and you have 36 months left in your term, refinancing likely makes financial sense.
Can I add the prepayment penalty to my new mortgage?+
Some lenders allow you to roll the penalty into your new mortgage, spreading the cost over the new amortization. This avoids a large upfront payment but means you pay interest on the penalty amount. Compare the all-in cost before deciding.