Break my mortgage calculator
Enter your balance, rate, how long is left, the rate you could switch to and the lender's comparison rate. You get the likely penalty, the savings and the number of months to break even.
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How much is it to break a mortgage in Canada?
The penalty is usually the higher of three months' interest on what you owe and the interest rate differential (IRD), plus an administration fee. The Financial Consumer Agency of Canada's example is $200,000 at 6% with 36 months left and a 4% comparison rate: three months' interest is about $3,000, the IRD about $12,000, and the penalty is the higher. On $400,000 at 5.5% with 36 months left the estimate is $18,000.
Why we built this calculator
Breaking a mortgage early can save thousands in interest or cost thousands in penalty, and the answer depends on a number that is hard to find: the interest rate differential. This calculator estimates it the way the Financial Consumer Agency of Canada's example does, shows the other method, three months' interest, next to it, and then answers the question that matters, which is whether the lower payment earns the penalty back before your term ends.
If you are selling rather than refinancing, see the home sale proceeds calculator, and for the payment on a new mortgage the mortgage payment calculator.
It runs in your browser. Nothing you enter is sent anywhere, and there is no sign-up.
When to use it
- Deciding whether to refinance into a lower rate before renewal
- Estimating the penalty before you sell or move
- Comparing the penalty with the savings from a lower payment
- Checking whether to wait until your term ends
Mistakes it helps you avoid
- Comparing the penalty only with the first year's savings.
- Assuming the penalty is always three months' interest.
- Forgetting the administration fee.
- Not asking for the penalty in writing before you sign anything new.
How the penalty and the break-even are worked out
The higher of two penalties, then the savings against it.
three months' interest = balance × rate ÷ 12 × 3IRD (estimate) = balance × (your rate − comparison rate) × years left (not below zero)penalty = the higher of the two, plus any administration feepayment = balance × i ÷ (1 − (1 + i) ^ −months), i = (1 + rate ÷ 2) ^ (2 ÷ 12) − 1months to break even = (penalty + fee) ÷ (current payment − new payment)net result = all you would pay to the end of the term if you stay − the same if you switch, penalty included
The Financial Consumer Agency of Canada says the penalty will usually be the higher of three months' interest on the amount owed and the IRD, that lenders usually use the IRD when your rate is above the current rate and you signed less than five years ago, and that an administration fee may be added. Its worked example, $200,000 at 6% with 36 months left and a 4% posted rate, gives about $3,000 and about $12,000. Balance times rate difference times years left reproduces that. The Interest Act requires a mortgage rate to be stated as calculated yearly or half-yearly, which is why payments here use semi-annual compounding.
Worked example: $400,000 at 5.5%, 36 months left
You owe $400,000 at 5.5% with 36 months left in the term and 22 years of amortization. The lender's comparison rate is 4%, you could switch to 4.2% and the administration fee is $300.
- Three months' interest: $400,000 × 5.5% ÷ 12 × 3$5,500.00
- IRD estimate: $400,000 × (5.5% − 4%) × 3 years$18,000.00
- Penalty and fee$18,300.00
- Payment now and at 4.2%$2,601.09 and $2,316.05
- Months to earn back the cost from the lower payment64.2
- Net result at the end of the current term−$3,268.31
Switching costs $18,300.00 and saves $285.04 a month, so it takes 64 months to earn back, longer than the 36 months left. By the end of the term you are $3,268.31 behind.
At a new rate of 5.0% the saving is only $111.54 a month and the result is −$12,511.22.
Terms on this page
- Interest rate differential
- A way to calculate a penalty by comparing the interest on your rest of term at your rate and at the lender's current rate.
- Porting
- Moving your existing mortgage, with its rate and terms, to a new home.
Common questions
How is a mortgage penalty calculated?
Usually as the higher of three months' interest on the balance and the interest rate differential, plus an administration fee, according to the Financial Consumer Agency of Canada.
What is the interest rate differential?
A comparison of the interest you would pay on the rest of your term at your rate with the interest at the lender's current rate for that term. The calculator uses balance times the rate difference times the years left.
When is the IRD used?
Lenders usually use it when your rate is above the current rate and you signed less than five years ago.
Can I avoid the penalty?
Ask your lender whether you can port the mortgage to a new home, which keeps your rate and terms, or wait until your term ends.
Does the lender have to tell me the penalty?
Federally regulated lenders must give a written statement with the charge and how it was calculated when you prepay in full, according to the FCAC's code of conduct.
Where these numbers come from
- Financial Consumer Agency of Canada — Mortgage fees: Prepayment penalties The higher of three months' interest and the IRD, the $200,000 example and the administration fee; October 15, 2025.
- Financial Consumer Agency of Canada — Code of Conduct: Mortgage prepayment information The written statement a lender must give when you prepay in full.
- Justice Laws Website — Interest Act, section 6 A mortgage rate calculated yearly or half-yearly.
Last verified 2026-10-25 Rates on this page are checked against the sources above at least once a year, and whenever the governing authority announces a change. Spotted something out of date? Tell us and we will fix it.
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