You can typically just call the lender and ask them to tell you the penalty. It'll usually either be 3-months interest or the "interest rate differential", whichever is larger - the details will be set out in the mortgage terms.
There are some other threads on this topic in the forum that have some relevant posts - you should be able to find some good thoughts there.
Also, CanadianMortgageTrends website is a great resource for all things mortgage. I'm pretty sure they've got some analysis on the topic over there.
I did break my mortgage recently, and early-renewed with the same lender. I may have jumped the gun just a little bit and could probably have done better today, but when we are talking about 10ths of a point when rates are at 4%, I feel fortunate to be able to be paying down a mortgage today.
Breaking your fixed mortgage term and moving to a lower interest rate may seem like an easy way to improve your cashflow. But in reality it could be a very expensive trip to the bank.
Here are the three key issues you need to consider before you go any further.
1. How much will it cost to break my fixed term?
You need to contact your lender or mortgage broker to find out exactly how much it will cost to break your term. There will be a “break fee” and possibly an administration fee to pay.
Before you talk to your lender, check what your mortgage document says about the fees that will be charged and how these are worked out. You’ll find this information under the heading “Early Repayment”.
2. Can I add the break fee to my loan?
You may be able to add the break fee to your mortgage rather than paying it up front.
You also need to consider whether increasing your long-term debt is worth the short-term benefit of reduced mortgage repayments.
3. Is it worth breaking the term?
To answer this question you need to look at the cost of your borrowing, not just the cost of your regular repayments.
If you purchased your home in 2006 or prior and have been in a five year fixed mortgage for over 2 years it is basically impossible not to come out ahead refinancing now. If you have any debt that you are paying over 4% for you will further increase your savings.
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