Estimate what breaking your mortgage costs in BC: three months’ interest, the fair IRD method, and the posted-rate method most big banks use. If you’re weighing a mid-term switch or refinance, this is the number that decides it.
Frequently asked questions
Why is my bank’s penalty so much higher?
Big banks calculate IRD against posted rates and claw back the discount you got at signing. The same mortgage broken at a monoline lender often costs a fraction as much, which is what the two IRD tiles above show.
Is the penalty ever zero?
At maturity. That makes renewal the cheapest exit there is, and it is why timing a refinance to your renewal date can save five figures.
Can I shrink a penalty I have to pay?
Two levers: use your annual prepayment privilege first to cut the balance the penalty is calculated on, or port the mortgage to your next property instead of breaking it.