Mortgage Penalty Estimator

Two methods, side by side.Canadian lenders use one of two approaches to calculate the Interest Rate Differential. The Posted Rate Method (common at the Big Five banks) subtracts your original rate discount from today's posted rate, which can inflate the penalty when discounts were large. The Comparison Rate Method (common at monoline lenders) uses today's actual rate directly. The same mortgage can produce dramatically different penalties depending on which method applies — that gap is the first number worth knowing.

The break-even rate is your decision shortcut.It's the new mortgage rate at which the savings from refinancing exactly match the cost of paying the penalty. If you can get a rate below your break-even, you come out ahead. We display it for both methods so you can immediately see which one your lender uses and whether refinancing is even on the table.

The projection chart shows when to break, not just how much. As your remaining term shrinks, the comparison rate steps down to a shorter term — and your penalty can jump by thousands of dollars in a single payment cycle. The shaded “best window” on the chart marks the period where breaking is cheapest, before the next transition point.

For a deeper dive into how penalties work, including the role of your original discount and how to use a payout statement strategically, read our complete guide to mortgage penalties in BC.