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Mortgage Penalty Calculator: Should You Break Your Mortgage?
Estimate the penalty for breaking your mortgage early (3 months' interest or the interest rate differential), then see whether a lower rate would save enough to make it worth it.
Your Mortgage
From today to your maturity date.
Your lender's current rate for a term close to the time you have left. Pre-filled with the lowest advertised rate.
Big banks use posted rates: enter their posted rate when you signed minus your rate. Leave at 0 for most other lenders.
Pre-filled with the lowest advertised 5-year fixed (October 23, 2026).
Your lender's discharge fee plus any legal or appraisal costs you'd pay.
Estimated Penalty
$9,600
Interest rate differential
Total Cost to Break
$10,100
Net Saving
$884
Over 36 months left
Break-Even
Month 34
Your Scenario
- Mortgage balance
- $400,000
- Your rate
- 5.29% fixed
- Months left in term
- 36
- Lender's current rate for the time left
- 4.49%
- Remaining amortization
- 22 years
- New rate compared
- 4.34%
- Discharge and other costs
- $500
Your Estimated Penalty
Estimated Penalty
$9,600
Interest rate differential
3 Months' Interest
$5,233
Interest Rate Differential
$9,600
5.29% − 4.49% for 36 months
Total Cost to Break
$10,100
Penalty + $500 costs
Fixed-rate penalties are usually the greater of 3 months' interest and the interest rate differential. Your lender's payout statement is the only exact figure.
How the Penalty Is Worked Out
| Method | Calculation | Amount |
|---|---|---|
| 3 months' interest | $400,000 at 5.29% for 3 months | $5,233 |
| Interest rate differential | $400,000 × (5.29% − 4.49%) × 36/12 | $9,600 |
Big banks subtract the discount you got at signing from their current posted rate, which can make the penalty much larger. Enter that discount above if your lender is a big bank.
Is It Worth Breaking?
Net Saving
$884
Over the 36 months left, after penalty and costs
Interest Saved
$10,984
At 4.34% instead of 5.29%
Break-Even
Month 34
When interest saved covers the cost
Your Mortgage vs a New Mortgage for the 36 Months Left
| Keep Current | Break and Switch | |
|---|---|---|
| Interest rate | 5.29% | 4.34% |
| Monthly payment | $2,554 | $2,346 |
| Interest over the time left | $60,453 | $49,469 |
| Penalty and costs | $0 | $10,100 |
Compares the same balance and amortization over the months left in your current term only.
Ways to Lower or Avoid the Penalty
- Wait for maturity: there's no penalty at the end of the term, and many lenders let you renew early in the last few months.
- Blend and extend: your lender blends your current rate with today's rate instead of charging a penalty.
- Port the mortgage if you're moving, so the term carries over to the new home.
- Use your prepayment privilege first: some lenders let you pay down part of the balance before breaking, which lowers the amount the penalty is charged on. Ask yours.
What This Means for You
Breaking now looks worthwhile: at 4.34% you'd save about $10,984 in interest over the 36 months left, which covers the $10,100 penalty and costs by month 34.
There can still be good reasons to break: consolidating high-interest debt, accessing equity, or moving. A refinance comparison shows the full picture.
Ask your lender for a written payout statement before deciding. A licensed mortgage professional can compare breaking, blending and waiting for your situation.
Your Pathway to Homeownership Starts With Understanding Your Numbers
Your calculator results are estimates. Nandan Bajani can help you review your situation and understand your mortgage options.
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