What will it cost to break my mortgage to refinance?
The higher of three months' interest and the interest-rate differential, as FCAC describes it.
Estimated prepayment penalty$4,890Three months' interest is higher
- Three months' interest
- $4,890
- Interest-rate differential
- $3,100
- Comparable rate used
- 4.58%
Ways around itAsk your lender about a blend-and-extend (adds new money at a blended rate without breaking), a HELOC behind the mortgage, or waiting until renewal, when there's no penalty. Use your annual prepayment privilege first to shrink the balance the penalty is charged on.
Estimate, not advice. Educational estimate only, not financial, mortgage, tax or legal advice. Lenders, insurers and governments set their own rules and can change them; confirm with a licensed professional before you decide.
Estimated penalty $4,890 (3 months' interest).
Show the numbers
| 3 months' interest | IRD | |
|---|---|---|
| 6 mo | $5K | $620 |
| 12 mo | $5K | $1K |
| 18 mo | $5K | $2K |
| 24 mo | $5K | $2K |
| 30 mo | $5K | $3K |
Assumptions & sources
Assumptions
- FCAC: the penalty is usually the higher of 3 months' interest on what you owe or the IRD; lenders usually use the IRD when your rate is above current rates.
- IRD = balance × (your rate − comparable rate) × years left. With the posted-rate method, comparable = today's posted rate for the time left − (posted rate when you signed − your rate).
- Your lender's mortgage contract defines the exact method and rates.
Sources
- Financial Consumer Agency of Canada — Reduce mortgage prepayment penalties (effective October 15, 2025). Checked .
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