Prepaying without a prepayment charge

Strategies you can use to avoid prepayment charges

If you choose to pay out your mortgage prior to the maturity date, prepayment charges may apply. However, there are ways that you can avoid prepayment charges.

Prepay within your privilege allowance

Charges do not apply if you stay within your applicable prepayment privileges as set out in your mortgage. These may include an allotted lump sum payment privilege, a double up privilege or the ability to increase your payment by only 15%* each anniversary year.

*15% payment increase applies only to fixed rate mortgages. Check your mortgage documents to see what prepayment privileges you may have.

Change your payment frequency

You can avoid charges if you choose to switch to accelerated payments. Accelerated payments enable you to pay 13 months of payments in 12 months, so you are increasing your payments to pay down your mortgage more quickly without using your privileges.

Pay out on your maturity date

If you wait to pay out your mortgage until your term’s maturity date, you will not have to pay any prepayment charges.

Consider mortgage assumption or port your mortgage

If someone assumes your mortgage before it matures, prepayment charges will not apply (new applicant must qualify before assumption). If you qualify to port your mortgage, prepayment charges will not apply and your existing mortgage rate and terms will move with you to your new home.

Important things to know about prepayment charges

A smaller balance can help to reduce prepayment charges. You can lower your balance by using your prepayment privileges.
Prepayment charges can change without notice based on certain factors including:
- Interest rates – changes in the prime rate affect adjustable rate mortgages and changes in posted rates can impact penalties calculated based on the Interest Rate Differential (IRD).
- Time remaining in your term – the time left in your term determines the rate used in IRD calculations (less time means a lower penalty).
- Loan balance – what you have left owing (including missed payments or unpaid fees).

Prepayment Calculator

Estimate your prepayment charges based on how much you choose to prepay. Log in to My Mortgage to access the calculator or contact us at 1.888.488.0794.

Additional Resources

If you choose to pay more than your prepayment privileges allow, you may face additional charges or penalties. Learn when and how these charges may apply to you.

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