Prepayment penalty analyzer
What would it cost to break my mortgage? Big-bank penalty calculator
Short answer: Breaking a closed fixed mortgage at a big bank usually costs the greater of 3 months’ interest or an interest rate differential against the bank’s posted rate less your discount; National Bank adds up to $500 to a differential it interpolates between terms. Pick your bank below for its own rates and formula, and see whether breaking pays.
Pick your bank and when your term started. We price the penalty with that bank’s own posted-rate table and formula, tell you whether breaking pays, show how waiting shrinks the cost, and compare all six big banks.
RBC Royal Bank · estimated cost to break today
$8,951
IRD applies
RBC: greater of 3 months’ interest or the IRD against its posted rate for the closest term (2-yr posted), less your discount.
Moving to 5.14% would save about $7,498 in interest over the 21 months left, so you’d be $1,453 behind after the penalty. Waiting for renewal, or porting, is likely cheaper.
Break-even new rate: 4.96%. Below that, breaking pays before your current term would have ended. Ignores legal, appraisal and discharge fees. For a full refinance break-even with fees, see Revalued.ca.
Waiting cuts the penalty
If posted rates stay where they are, waiting 6 months brings the estimate to $6,994; at maturity it’s $0. Early renewal at RBC: Up to 120 days early, no penalty.
Three ways to pay less
- Prepay first. Using this year’s privilege first lowers the base the penalty is charged on (10% lump sum a year, 10% payment increase every 12 months, plus double-up payments.)
- Port instead of breaking. Port when buying and selling at the same time; extra money can be blended at the current rate.
- Blend and extend. FCAC describes early renewal at a blended rate as a way to avoid a full penalty. Ask RBC for a quote.
RBC’s own penalty page ↗ · always get the bank’s written payout figure.
The same mortgage at each big bank
Same balance, rate, discount and time left, priced with each bank’s own posted table (Nov 2, 2026) and the formula it publishes. This shows how much the bank’s penalty rule and posted table matter.
| Bank | Estimated penalty | 3 months’ | Compares with |
|---|---|---|---|
| RBC | $8,951 | $7,080 | 2-yr posted 5.74% |
| TD | $11,799 | $7,080 | 2-yr posted 5.39% |
| National Bank | $13,011 | $7,952 | 1- and 2-yr rates, interpolated for 21 months 5.30% |
| Scotiabank | $13,020 | $7,080 | 2-yr posted 5.24% |
| CIBC | $13,020 | $7,952 | 2-yr posted 5.24% |
| BMO | $15,461 | $7,080 | 2-yr posted 4.94% |
Estimates use simple interest over the months left (as in FCAC’s example); RBC and Scotiabank say they use a present-value basis, which lowers the real figure somewhat. For a term over five years broken after year five, the Interest Act caps the charge at 3 months’ interest, and the analyzer applies that. Today’s month is taken from your device; rates are as published on November 2, 2026.
Not with a big bank? Compare the two IRD methods
Monoline and other lenders publish their own formulas. Enter your numbers to see the posted-rate and contract-rate methods side by side. The example is $480,000 at 5.29% with 30 months left, signed at a 6.89% posted rate, using TD’s 3-year posted 6.15% and special 5.24% (November 2, 2026).
Estimated penalty
$8,880
IRD applies (greater of the two, posted-rate method)
Same mortgage, two IRD methods
Your discount at signing was 1.60%, so the posted-rate comparison rate is 4.55%.
Get the real number from your bank
This is an estimate. Each big bank publishes its own penalty calculator or explanation, and your mortgage contract governs. Ask for a written payout quote before you break.
RBC Royal Bank
Greater of 3 months’ interest or IRD vs RBC’s posted rate for a similar term, less your rate reduction. Variable: 3 months’ interest.
TD Canada Trust
Higher of 3 months’ interest or IRD using TD’s posted rate for a similar mortgage minus your discount. Variable: 3 months’ interest.
Scotiabank
Greater of 3 months’ interest or IRD vs Scotiabank’s posted rate for the closest term, less your discount. Variable: 3 months’ interest.
BMO Bank of Montreal
Higher of 3 months’ interest or IRD vs BMO’s posted rate for the closest term, taking your discount into account. Variable: 3 months’ interest.
CIBC
Greater of 3 months’ interest (at your rate + discount) or IRD vs CIBC’s current posted rate. Variable: 3 months’ interest at CIBC Prime.
National Bank
Higher of 3 months’ interest or 1 month’s interest (max $500) plus the interest differential. Variable: 3 months’ interest.
Before you break, use this year’s lump-sum privilege first. The penalty is then charged on a smaller balance. If you are moving, ask about porting instead: see portability at the big banks.
Banks compound, round and choose comparison terms in their own ways, some add admin or discharge fees, and cash-back mortgages may require repayment of the cash back. A refinance or switch can also involve legal and appraisal costs.
Frequently asked questions
How do Canadian banks calculate a prepayment penalty?
For a closed variable-rate mortgage, the penalty is usually 3 months’ interest. For a closed fixed-rate mortgage it is usually the greater of 3 months’ interest and the interest rate differential (IRD). FCAC’s example: on a $200,000 balance at 6%, 3 months’ interest is $3,000; with 36 months left and a comparison rate of 4%, the IRD is $12,000. The bank’s mortgage contract sets the exact method.
Why are big-bank IRD penalties often larger?
RBC, TD, Scotiabank, BMO and CIBC describe an IRD that uses their posted rate for a term close to the time remaining, adjusted for the discount you received when you signed. Because the discount is subtracted, the comparison rate can be well below today’s posted rate, which widens the gap and raises the IRD. Many monoline lenders compare against their current contract rate instead. This estimator shows both so you can see the difference. Each bank’s own wording is on its profile.
Can I lower the penalty?
Often. Use your annual prepayment privilege first (the penalty is then charged on a smaller balance), ask whether you can port the mortgage to a new home, or ask for a blend-and-extend. Time the break near the end of the term, when fewer months remain. Always get the lender’s written penalty quote before deciding.
Is there a cap on the penalty after five years?
For a mortgage with a term longer than five years, the Interest Act (s.10) lets an individual borrower repay after the fifth anniversary with no more than 3 months’ interest as a penalty.
Sources
- Reduce or avoid prepayment penalties — FCAC, checked Oct 31, 2026
- Interest Act (R.S.C. 1985, c. I-15), ss. 6 and 10 — Justice Laws, checked Oct 31, 2026
- Understanding mortgage prepayment charges — RBC Royal Bank, checked Oct 31, 2026
- Mortgage prepayment calculator — TD Canada Trust, checked Oct 31, 2026
- What you need to know: mortgages and mortgage prepayment charges (PDF) — Scotiabank, checked Oct 31, 2026
- Paying off your mortgage faster (prepayment privileges, prepayment charges, portability) — BMO, checked Nov 2, 2026
- Mortgage prepayment (privileges and prepayment charges) — CIBC, checked Oct 31, 2026
- Pay off your mortgage faster (prepayment and charges) — National Bank, checked Oct 31, 2026
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Educational information only, not financial, legal or tax advice. BankMortgages.ca is independent and is not affiliated with, endorsed by or paid by any bank named on this site. Bank terms change: confirm every rate and term with the lender and the official sources linked on each page before you act. Read the full disclaimer.
