Prepaying without a prepayment charge

How to avoid prepayment charges

In certain scenarios, charges apply if you choose to prepay your closed-term mortgage prior to the maturity date. However, there are ways to avoid prepayment charges. To help you manage your mortgage as efficiently as possible and save costs, we have outlined several ways that you can use your First National prepayment privileges to your advantage.

Reducing prepayment charges

Reducing your mortgage’s principal balance reduces the Interest Rate Differential (IRD), which is used to calculate the prepayment charge. Ways to reduce your principal balance include:

  • Double up payment: you can double up your payment of principal and interest on any regular payment date.
  • Lump sum prepayment: every anniversary year* of your mortgage, you can pay up to 15% of your original mortgage balance on any regular payment date. You can choose to pay the lump sum in one payment or divide it up throughout the year.
  • Payment frequency: you can change how often you pay your mortgage (i.e. switching from monthly to weekly).
  • Port your mortgage: If you’ve sold your home and purchased a new one, you can transfer or “port” your mortgage with you to your new home.

*An anniversary year begins and ends with the date your mortgage was advanced or renewed.

Factors that could cause prepayment charges to change over time

Prepayment charges may change over time if:

  • First National’s rates change (changes to the First National Prime Rate will affect prepayment charges on adjustable rate mortgages and changes to the First National posted rates will affect the IRD calculations on fixed mortgages)
  • The remaining term of your mortgage changes (which affects the amount of interest charged) or an anniversary year passes (which affects the amount of interest charged and IRD calculations).
  • Your principal balance changes (unpaid mortgage payments or other fees and charges added to the mortgage, or other changes to the outstanding mortgage balance, will affect prepayment charges). 
  • The term of your mortgage is greater than 5 years. After the 5th anniversary date the prepayment charge is calculated using a 3-month interest charge). This is applies to fixed rate mortgages.

Use First National’s prepayment calculator to estimate potential prepayment charges for your mortgage. Your prepayment privileges are outlined in your mortgage documents. The prepayment calculator is also available by logging into My Mortgage.

Our mortgage specialists can tailor a plan to assist you with meeting your financial goals. If you have more questions, please contact Customer Service at 1.888.488.0794 from 8:30am to 8:00pm (EST), Monday through Friday or by email at

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