April 24, 20263 min read
This is one of the most useful questions to answer early in the mortgage process. Closed variable mortgages often use a different prepayment-penalty approach than fixed mortgages, which is one reason borrowers value their flexibility.
The factors that change the answer
Here is what matters most:
- A common structure is a charge based on several months of interest, but the exact formula is determined by the contract.
- Open variable mortgages may allow full repayment without a prepayment penalty, typically in exchange for a higher rate.
- Legal, discharge, appraisal or new-lender costs can still apply even when the mortgage penalty itself is modest.
- Always request a written payout statement before deciding to refinance or switch.
Compare the total cost of leaving the mortgage, not only the headline penalty.
Want this applied to your own numbers?
Call Phil Cragg at 866-349-4915 or request a written comparison.
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