Fixed vs Variable

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Can I Break a Fixed Mortgage Early and What Is the Penalty?

You can usually break a closed fixed mortgage before maturity, but the prepayment penalty can be substantial.

April 27, 20263 min read

For many Canadian homebuyers, this question comes up before they are ready to make an offer. You can usually break a closed fixed mortgage before maturity, but the prepayment penalty can be substantial.

What lenders actually look at

Here is what matters most:

Many lenders calculate the charge as the greater of three months' interest or an interest rate differential, subject to the mortgage contract.
IRD methods vary by lender, so two similar mortgages can produce very different penalties.
Selling, refinancing or switching lenders before maturity can all trigger the charge.
Portability or blend-and-extend options may reduce the need to break the mortgage in some situations.

Before signing a fixed mortgage, ask the lender to explain its penalty formula using a realistic example.

Want this applied to your own numbers?

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Renewals

Five mortgage renewal mistakes Ontario homeowners keep making

The renewal letter in your mailbox is a first offer. Here is what it costs to treat it as the only one.

First-Time Buyers

How much down payment do you actually need in Ontario?

The minimum is not the same at every price point, and the down payment is not the only cash you need on closing day.

Rates

Fixed or variable: how to decide without guessing rates

Nobody can forecast the overnight rate. You can still make this decision on evidence rather than opinion.

Find out what you actually qualify for

Send the basics and we'll come back with real lender options, or call and get an answer on the first conversation.

Request a rate quote 866-349-4915