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Mortgage Penalty Calculator BC: What Will It Cost to Break Your Mortgage?
Quick answer: Breaking a variable mortgage usually costs three months' interest. Breaking a fixed mortgage usually costs the greater of three months' interest and an interest rate differential, which can be far larger when rates have fallen since you signed. Enter your numbers below for an estimate, then ask your lender for a written payout statement.
Mortgage penalty calculator
Enter your mortgage. The calculator shows three months' interest and an interest rate differential estimate, then the larger of the two, which is what most fixed mortgages charge.
Estimated penalty
$6,550
An estimate. Each lender sets its own penalty formula in your mortgage terms; ask your lender for a written payout statement before you act.
Three months' interest or the interest rate differential?
| Penalty | How it works | Usually charged on |
|---|---|---|
| Three months' interest | Balance × your rate ÷ 4 | Variable mortgages, and fixed mortgages when rates have gone up |
| Interest rate differential | Balance × (your rate minus the lender's rate today for the time left) × years left | Fixed mortgages when rates have gone down |
| Posted rate differential | The same, but using posted rates less the discount you got, which widens the gap | Fixed mortgages at some lenders; check your mortgage terms |
How to lower the penalty
- Use your prepayment privilege first. Paying down the balance by your yearly allowance before you pay out reduces what the penalty is charged on.
- Port the mortgage. If you are moving, take the mortgage to the new home. See how porting works.
- Blend and extend. Some lenders blend your rate with today's rate instead of charging a penalty.
- Time it. The differential shrinks as your term runs down, and many lenders let you renew early without a penalty in the last 120 days.
Read the full guide on avoiding mortgage penalties in BC, or compare the cost of moving lenders at renewal with the mortgage renewal calculator and the refinance calculator.
Does breaking your mortgage still pay?
Add the penalty to about $1,000 to $1,500 for legal and discharge fees, then compare it with the interest you would save at a new rate over the rest of your term. If the saving is bigger, breaking can pay. If you are consolidating debt or need equity, the comparison is with the cost of that other debt. See debt consolidation in BC.
Talk to Asim about your mortgage
Call 604‑591‑3590 now, or send your details and Asim will reply within one business day.
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Frequently asked questions
How is a mortgage penalty calculated in Canada?
A variable rate mortgage usually costs three months' interest to break. A fixed rate mortgage usually costs the greater of three months' interest and an interest rate differential, which is based on the difference between your rate and the lender's current rate for the time left in your term.
Why is my fixed rate penalty so much higher than three months' interest?
Some lenders work out the differential with their posted rates and then take off the discount you got when you signed. That makes the gap between the two rates larger, and the penalty can be several times three months' interest.
Can I avoid the penalty?
Often you can reduce it. You can port the mortgage to a new home, blend your rate with a new one at the same lender, wait until closer to renewal, or use your prepayment privilege before you pay out, which lowers the balance the penalty is charged on.
Is it worth breaking my mortgage to get a lower rate?
Only if the interest you save over the rest of the term is more than the penalty plus legal and discharge costs. Asim works out both numbers for you before you decide.
Do I pay a penalty if I sell my home?
Yes, unless you port the mortgage to your next home or your term has ended. Ask about porting before you sell; most lenders allow it within a set number of days.
Want a lender's view of your numbers? Book an appointment with Asim Ali, ranked #4 in the CMP Top 75 Mortgage Brokers in Canada for 2026, or call 604‑591‑3590.