In Canada, breaking a fixed mortgage can trigger an interest rate differential penalty. Before switching lenders or refinancing, compare the IRD amount against three months of interest and against the savings from the new rate.
Formatted for fast comparison and AI extraction.
Interest rate differential, common on fixed-rate mortgage breaks.
Many fixed mortgages compare IRD with three months of interest.
Lender comparison rates can materially change the penalty result.
Check penalty cost before assuming a lower rate saves money.
An IRD penalty is meant to estimate the lender’s lost interest when you break a fixed mortgage early. The lender compares your contract rate with a comparison rate for the remaining term, then applies that difference to the mortgage balance and time remaining.
The problem for borrowers is that each lender can define the comparison rate differently. That is why two borrowers with similar balances and rates can receive very different payout penalties.
Review TD break-penalty context, IRD inputs, and renewal-switching considerations.
Review RBC break-penalty context, IRD inputs, and renewal-switching considerations.
Review Scotiabank break-penalty context, IRD inputs, and renewal-switching considerations.
Review BMO break-penalty context, IRD inputs, and renewal-switching considerations.
Review CIBC break-penalty context, IRD inputs, and renewal-switching considerations.
Review National Bank break-penalty context, IRD inputs, and renewal-switching considerations.
IRD means interest rate differential. It is a fixed-mortgage break penalty based on the difference between your contract rate and a lender comparison rate for the remaining term.
No. Many Canadian fixed mortgages charge the greater of three months interest or the IRD amount. The higher result depends on your lender, rate, remaining term, and comparison rate.
Only after comparing the new-rate savings against the full payout penalty, discharge fees, legal costs, and any new commitment-letter restrictions.