Posted-rate penalty check

Three months' interest vs the interest rate differential (IRD), using the lender's own posted rates collected Nov 2, 2026 and the Bank of Canada posted rate for the month you signed.

Try a scenario:
Your mortgage
Your mortgage contract states how your lender calculates the penalty.
IRD method
24 months left in the term as of Nov 1, 2026.
Rates the lender compares against
Default: the Bank of Canada's typical big-bank posted 5-year rate for Nov 2023, 7.04%. Your lender's own posted rate that day may differ; it's on your commitment.
ATB Financial posted 2-year fixed, 6.54%, collected from its rates page on Nov 1, 2026 (closest term to 24 months).
Some lenders let you apply this year's lump-sum privilege before the penalty is calculated. Check your contract.
Default: lowest uninsured 2-year fixed we collected (Lakeland Credit Union, 4.49%).
Estimated penalty$4,790Three months' interest · 24 months left
Three months' interest
$4,790
IRD
$4,000
comparison 4.29%
Interest saved by switching
$2,400
at 4.49%
Net of the penalty
−$2,390
Breaking costs more than it savesThe penalty is larger than the interest you'd save at 4.49% over the time left. Waiting for renewal, porting or blending may cost less.

Estimate, not advice. An estimate. Your lender's payout statement is the only exact figure.

Estimated penalty $4,790 (three months' interest); 24 months left.

Penalty by months left and a move in the lender's rates
Months left ↓ / Rates move →−1.00−0.50today+0.50+1.00
6 mo$4,790$4,790$4,790$4,790$4,790
12 mo$6,000$4,790$4,790$4,790$4,790
24 mo$12,000$8,000$4,790 (your inputs)$4,790$4,790
36 mo$18,000$12,000$6,000$4,790$4,790
48 mo$24,000$16,000$8,000$4,790$4,790
Each cell recalculates the penalty with the comparison rate moved up or down and a different time left. Rising rates shrink an IRD.

What is driving this result

  • Posted-rate method: your discount at signing was 7.04% posted − 4.79% your rate = 2.25% points. Today's comparison rate is 6.54% (ATB Financial posted 2-year, collected Nov 1, 2026) − 2.25% = 4.29%.
  • IRD = $400,000 × (4.79% − 4.29%) × 24 ÷ 12 months = $4,000. Three months' interest = $4,790. Lenders charge the greater, so three months' interest applies.
  • Breaking now and taking 4.49% for the 24 months left would save about $2,400 of interest, $2,390 less than the penalty.

Your saved scenarios

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See each lender's posted and special rates on the full rate table, or how posted and special rates differ in our guide.

Assumptions & sources

Assumptions

  • Closed fixed-rate mortgage: the penalty is the greater of three months' interest and the IRD (FCAC). Variable-rate mortgages usually charge three months' interest only.
  • IRD = balance × (your rate − comparison rate) × months left ÷ 12. Some lenders discount this to present value, which makes it a little smaller.
  • Posted-rate method: comparison rate = today's posted rate for the term closest to the time left, minus the discount you got at signing (posted then − your rate). Published-rate method: the lender's current rate for that term.
  • "Closest term" varies by lender (some round down). Lender posted rates are read off their own pages on the date shown; the Bank of Canada posted rate is a typical big-bank figure.
  • Interest saved is a simple estimate on the current balance; it ignores fees and the shrinking balance.

Sources

  1. Financial Consumer Agency of Canada — Reduce prepayment penalties. Checked .
  2. Financial Consumer Agency of Canada — Breaking your mortgage contract. Checked .
  3. Justice Laws — Interest Act (R.S.C. 1985, c. I-15), ss. 6 and 10. Checked .
  4. Bank of Canada — Posted conventional mortgage rate, 5-year (series V80691335) (effective October 28, 2026). Checked .
  5. ATB Financial — Mortgage rates page. Checked .
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