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How do I calculate my prepayment charge?

Mortgage prepayment charges will differ depending on the type of mortgage product you currently hold. Use the calculator or manually calculate an estimate or your prepayment charge using the formulas outlined by product below. The formulas are relevant to both a full or partial payout of your mortgage.

For purposes of a partial lump sum payment, simply input the lump sum amount in place of the “Mortgage Balance” in the calculation scenarios.

Variable Rate Mortgage, Lock and Roll Mortgage and Adjustable Rate – Adjustable Payment Mortgage

For a closed variable rate mortgage, lock and roll mortgage and adjustable rate – adjustable payment mortgage, the prepayment charge is three months' interest. An estimate of the three month interest calculation is:

(Mortgage Balance x Annual Interest Rate) / 4 = three month interest prepayment charge

  • Mortgage Balance: The principal balance of your mortgage at the time of prepayment
  • Annual Interest Rate: Your annual interest rate outlined in your original mortgage documents

Click here for an example.

Fixed rate mortgage

For a closed fixed rate mortgage, the prepayment charge is the greater of either:

  • Three month interest prepayment charge (as illustrated above);
    or
  • Interest Rate Differential (IRD) prepayment charge, which is the difference between the present value of your mortgage at your annual interest rate (as outlined in your original mortgage documents) and the present value of your mortgage at our current reinvestment rate calculated over the remaining term of your mortgage.

    Note: Our Current Reinvestment Rate is not our Mortgage Posted Rate. It is based upon our funding costs and reflects the interest rate which we may lend to other clients of similar credit worthiness, on a property of similar quality, for a term equal to the remaining term of your mortgage. Our Current Reinvestment Rate will typically be lower than our Mortgage Posted Rate. You can obtain our Current Reinvestment Rate by using our IRD prepayment charge calculator or by calling our Mortgage Servicing Centre at 1-800-328-6488.

Click here for an example.

Calculating the IRD prepayment charge

The IRD prepayment charge may be estimated using a Simplified IRD Calculation method or an Actual IRD Calculation method, as follows:

Simplified IRD Calculation

The Simplified IRD Calculation is intended to provide an estimate of the IRD prepayment charge that would apply. Please note, the Simplified IRD Calculation will be higher than the Actual IRD prepayment charge and is provided for illustrative purposes only. The Simplified IRD Calculation is:

Mortgage Balance x ((Annual Interest Rate – Current Reinvestment Rate) / 12) x term remaining = Simplified IRD prepayment charge

  • Mortgage Balance: The principal balance of your mortgage at the time of payoff
  • Annual Interest Rate: Your annual interest rate outlined in your original mortgage documents
  • Current Reinvestment Rate: Available by using our prepayment charge calculator or by calling our Mortgage Servicing Centre at 1-800-328-6488
  • Term remaining: The number of months remaining in the term of your mortgage

Click here for an example.

Actual IRD Calculation

The Actual IRD Calculation is the difference between the present value of your mortgage at your annual interest rate (as outlined in your original mortgage documents) and the present value of your mortgage at our current reinvestment rate, calculated over the remaining term of your mortgage. The Actual IRD Calculation is:

Pv(rRate, Nper, -Pmt, -Fv) – Mortgage Balance = Actual IRD prepayment charge

  • rRate: The monthly equivalent of our Current Reinvestment Rate, compounded semi-annually, not in advance. The monthly equivalent rate = (1 + our Current Reinvestment Rate / 2) ^ (1 / 6) - 1.
  • Nper: The number of months remaining in the term of your mortgage
  • Pmt: The current monthly principal and interest payment on your mortgage. If the payment frequency is other than monthly, one can calculate the monthly equivalent payment by multiplying weekly payments by 4, and bi-weekly or semi-monthly payments by 2.
  • Fv: The principal balance of your mortgage at the expiry of the current term and is calculated using a future value (FV) formula:
    • FV(aRate,Nper, Pmt,-Pv), where the variables are identical to the above, except for:
      • aRate is the monthly equivalent of your annual interest rate, compounded semi-annually, not in advance. The monthly equivalent rate = (1 + annual interest rate / 2) ^ (1 / 6) - 1.
  • Mortgage Balance: The principal balance of your mortgage at the time of prepayment

Prepayment charge calculator

Before using the prepayment charge calculator, we recommend you have your original mortgage documentation on-hand to help you enter accurate information.

Use the Prepayment Charge Calculator.

If you have questions about your specific situation or would like to obtain written confirmation of your actual mortgage prepayment charge, which will be valid for 30 days after it is issued, please call our Mortgage Servicing Centre at 1-800-328-6488. In the province of Québec, call 1-800-565-2035.