Calculators · Owning and renewing

Mortgage penalty

Estimate the penalty for leaving a mortgage early under the two common methods, then weigh it against the interest a new rate would save.

Estimated penalty · Interest-rate differential

$6,480

Three months’ interest would be $5,500; the interest-rate differential against a 4.69% comparison rate is $6,480. Fixed-rate lenders charge the greater.

Breaking costs about $2,762 more than staying

$4,718 less interest at 4.89% over the remaining term, against $7,480 in penalty and fees; recovered in about 89 months of lower payments.

The two penalty methods

3 months’ interest$5,500
Rate differential$6,480

If you switch and roll the costs in

Payment now: $2,738
New payment: $2,654
Balance in 24 months: stay: $376,606
Balance in 24 months: switch: $382,089

Ask your lender for the exact figure

Every lender’s formula differs in the details, and the posted rate they use changes weekly. A written payout statement is the only number to rely on; this estimate tells you whether it is worth asking.

Assumptions behind these figures

Three months’ interest: balance × rate ÷ 4. Rate differential: balance × (your rate − comparison rate) × months remaining ÷ 12.
Posted-rate method: comparison rate = lender’s posted rate for the closest remaining term minus your original discount. Contract-rate method: the lender’s current rate for that term.
Interest saved compares the remaining term at each rate on the same amortization; penalty and fees are added to the new balance.

These calculators are educational illustrations, not advice and not an offer of credit. Figures are estimates from the inputs you enter and simplified rules; your lender's calculation, rates, fees, taxes and qualification will differ and are confirmed only by a licensed mortgage professional, lawyer or accountant. Mervin Truong is a licensed real estate professional, not a mortgage broker or financial advisor.

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Talk to Merv about the real numbers.

Mortgage penaltyMortgage penalty

Talk to Merv about the real numbers.

Mortgage penalty

Mortgage penalty