Mortgage Prepayment Charge Calculator

Calculate your prepayment charge and determine whether it is to your advantage-or disadvantage-to break your current closed mortgage.

This quick calculator will show you how much it may cost to prepay your mortgage, in part or in full.

Before getting started, please keep the following in mind:

• The tool estimates the prepayment charge (the cost to break the term of your mortgage) as of today's date on fixed or variable mortgages⁽¹⁾ having a closed term. Please contact us to find out your exact prepayment charge.
• The prepayment charge will be the greater of 3 months interest or interest for the remainder of the term on the amount prepaid calculated using the interest rate differential for fixed rate mortgages, and the 3 month interest charge for variable rate mortgages.
• To give you a more accurate estimate of your prepayment charge, you may need to have your original mortgage documentation on hand to answer some of the questions below.

Understanding Prepayment Charges

Prepayment charges are connected to mortgages where the interest term is 'closed'. The closed term allows for prepayments up to 10% of the original mortgage balance once per anniversary year. We call this your "Annual Prepayment Option". For example, if you took your mortgage out for $250,000 on February 1^st, you may make a payment of $25,000 every year between February 1^st and January 31^st. If you pay more than 10% of the original balance, you must pay a prepayment charge on the entire balance you wish to prepay.

You can reduce the outstanding balance of your mortgage, and therefore your prepayment charge, by exercising your Annual Prepayment Option before you pay off the mortgage.

Learn more about mortgage prepayment charges below, then continue to the calculator to estimate your prepayment charge.

How are prepayment charges calculated?

Prepayment charges are calculated differently depending on the type of mortgage you have. For Fixed rate mortgages, the prepayment charge will be the greater of 3 months interest or interest for the remainder of the term on the amount prepaid calculated using the interest rate differential. For variable rate mortgages, it is 3 months interest.

• Understanding Mortgage Prepayment Charges

When do I have to pay a prepayment charge?

Generally, there are four situations when you would incur prepayment charges:

1. when you make a prepayment on the mortgage (but do not pay off the mortgage), and the prepayment is greater than the annual prepayment option of 10%
2. when you prepay your mortgage in full before your maturity date
3. when you renew or refinance your mortgage before your maturity date
4. when you move your closed mortgage to another financial institution before the maturity date

• Refinance Your Mortgage
• Making Mortgage Principal Prepayments

Fixed and Variable

From the security of a fixed rate mortgage to the flexibility of a variable rate mortgage, you have several choices when it comes to interest rates. The interest rate for a fixed rate mortgage is locked in for the full term of the mortgage. A variable rate mortgage provides you with the flexibility to take advantage of falling interest rates and to convert to a fixed rate mortgage at any time. Alternatively, the RBC Homeline Plan allows you to split your mortgage and enjoy the advantages of both variable and fixed rates. The variable portion lets you take advantage of potential long-term savings, while the fixed rate portion protects you if rates rise.

• Variable and Fixed Rate Mortgages

Open and Closed Terms

Open term mortgages may be appealing if you are planning to pay off your mortgage in the near future. They can be repaid either in part or in full at any time without prepayment charges.

Closed term mortgages offer you the ability to save on interest costs and pay off your mortgage faster. You will pay a prepayment charge if you wish to renegotiate your interest rate or pay a part or the full balance of your mortgage prior to the end of its term.

• Closed, Open and Convertible Mortgages

Long and Short Terms

Long term mortgages are those interest terms that are generally 3 years or longer. Short term mortgages generally have an interest term of less than 3 years. With a longer term mortgage, you may not have the flexibility to take advantage of lower interest rates.

• Mortgage Questions and Answers

¹ You cannot prepay your mortgage unless all your payments are up to date.