Mortgage prepayment penalties

When switching or refinancing a mortgage before its term is up, one of the major costs to understand is the mortgage prepayment penalty.

Variable-rate mortgages are pretty straight-forward, charging 3 months of interest on your balance owed. Fixed-rate mortgages on the other hand, can be a bit more complicated. It's typically the greater of either 3 months of interest, or the Interest Rate Differential.

It sounds expensive. But despite penalties, moving to a lower interest rate can still benefit you simply because the interest on a mortgage can be so significant; even small drops in rate can create big savings.

This government resource has more details on the calcs here, and of course we are here to help guide you!