Mortgage Penalty Calculator (BC)
Estimate your break penalty before you refinance or sell early. One of the only free IRD calculators built for Canadian mortgages.
Mortgage Details
Find this on your lender's website under current rates for your remaining term length.
Estimated Break Penalty
Applied method: IRD (Interest Rate Differential)
Penalty Breakdown
3-Month Interest Penalty
Balance × Rate / 12 × 3
IRD Penalty
Balance × (4.89% − 3.29%) / 12 × 24 mo.
Applied: IRD (Interest Rate Differential) because it is the larger of the two.
Estimates Only
This calculator uses the contract-rate IRD method. Major banks (TD, RBC, BMO, Scotiabank, CIBC, National Bank) use their posted rates in the IRD formula — which can make the actual penalty substantially higher than this estimate. The exact penalty comes from your lender's official mortgage statement. We review penalty quotes free before you break a mortgage.
Common Questions About Mortgage Penalties
How is a mortgage penalty calculated in Canada?
Variable-rate mortgages typically carry a 3-month interest penalty. Fixed-rate mortgages use the greater of 3 months' interest or the Interest Rate Differential (IRD) — which compares your contract rate to the lender's current rate for the remaining term. Big banks use their posted rates (not discounted rates) in the IRD formula, which can make their penalties significantly higher than this estimate.
Why is a fixed mortgage penalty often higher than variable?
Fixed-rate mortgages can trigger an IRD penalty when interest rates have fallen since you signed. Because the lender loses the higher interest income for the remaining term, they charge you the difference. If rates have risen, your IRD is zero and only the 3-month interest applies.
Why does this calculator show a lower penalty than my bank quoted?
The big banks use their posted rates (not discounted contract rates) to calculate IRD. Because you likely got a discount off the posted rate at signing, the bank's IRD formula produces a much larger number than a straightforward rate comparison. This calculator uses the contract-rate method, which is how most monoline lenders and credit unions calculate penalties.
Should I break my mortgage to refinance?
It depends on how much you save in interest versus what you pay in penalty and legal fees. We review penalty quotes free of charge before you break a mortgage — contact us for a no-obligation analysis.
We Review Penalty Quotes Free
Before you break your mortgage, let us run the real numbers. We check your lender's penalty statement and show you exactly whether refinancing makes sense.