Prepayment penalty calculator
Estimate the penalty for breaking your mortgage early: three months' interest versus the IRD (interest rate differential), and which one usually applies.
Mortgage rules last reviewed: September 29, 2026
Your lender's current rate for a term closest to your remaining term. Leave at 0 if you don't know it: you'll see the minimum penalty.
Big banks subtract the discount you got when you signed from their posted rate.
- Three months' interest
- $5,200
- IRD (interest rate differential)
- Needs your lender's current rate
- Method that applies
- At least three months' interest
- Estimated penalty
- At least $5,200
For illustration only. Not a rate quote, approval or pre-qualification.
How this is calculated
- For a fixed rate, lenders charge the greater of three months' interest and the IRD. The IRD needs your lender's current rate, so only the minimum is shown. Enter that rate, or ask your lender for a payout statement.
- Lenders' exact methods vary. Ask your lender for a payout statement to get the exact number.
- Some mortgages allow prepayment privileges (for example 10% to 20% of the original amount each year) that can reduce the amount the penalty is charged on.
- IRD stands for interest rate differential: the gap between your rate and the lender's current rate, applied to your balance for the time left in your term.
Calculator disclaimer
Calculators are provided for general informational and illustrative purposes only.
Results are estimates and may not reflect lender-specific qualification requirements, mortgage-insurance premiums, taxes, fees, available products, payment calculations or other transaction costs.
Calculator results do not constitute:
- Mortgage approval
- Pre-approval
- A rate commitment
- A lending commitment
- Financial advice
- Tax advice
- Or legal advice
Mortgage rules, rates and lender requirements can change.
For advice about your specific circumstances, speak with the appropriate licensed professional.
But how does this apply to your business income?
This calculator estimates the numbers you entered. How a lender treats your salary, dividends or business income is a separate question, and it's the one the Mortgage Readiness Review looks at first.