Breaking Before Maturity in 2026: Penalty Math Made Simple
Thinking of breaking your mortgage before renewal? How IRD vs 3-months-interest penalties work, plus the break-even test to run first.
Reviewed by Scott Dillingham · Licensed Mortgage Agent (Ontario, Level 2) · Updated September 11, 2026
Renewal coming up?
Breaking a fixed mortgage costs the greater of 3 months’ interest or the interest-rate differential (IRD). Variable mortgages are capped at 3 months’ interest.
The break-even test
Monthly savings × months remaining in the new term must exceed penalty + legal + appraisal + discharge. If it doesn’t clear by month 12–18, waiting until maturity usually wins.
When breaking wins
- Dropping from a high 2023–2024 fixed to a meaningfully lower rate.
- Consolidating 19.99% revolving debt into the mortgage.
- Needing funds (reno, family) that a HELOC can’t cover cheaply.
Model the numbers with Break-Even Switch Calculator.
Mid-term with your current lender? Read Blend-and-Extend Guide before paying a full penalty.
Full hub: Best Mortgage Renewal Rates.
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