Understanding prepayment charges

When prepayment charges may apply to you

Depending on how you choose to manage your mortgage and payments, there may be times when you have to pay additional charges.

Prepayment charges can apply to closed mortgages if you:

Sell your home and choose to pay out the mortgage prior to its maturity date;
Renew your mortgage prior to its maturity date;
Pay an amount greater than your allowable prepayment privileges;
Refinance your mortgage;
Transfer your mortgage to another lender.

Prepayment penalities have different calculations based on the mortgage product you have:

Closed adjustable rate mortgage: three months’ interest on the amount being prepaid
Closed fixed rate mortgage: the greater of either three months’ interest on the amount being prepaid or an Interest Rate Differential (IRD)^* amount^**
Open mortgage: no prepayment charges

NOTE:

If, at the time of prepayment, there are less than three months remaining before a closed mortgage matures, a per-diem prepayment charge applies for the duration of the remaining term (calculated using the customer’s current interest rate).
For mortgages with terms greater than 5 years, after the 5th year the prepayment charge is calculated using a 3 month interest charge

^*Interest Rate Differential (IRD): the difference between your current mortgage interest rate and the current First National interest rate on a replacement mortgage for the time remaining on your mortgage term.

^**Prepayment penalties are subject to change based on changes in interest rates, the passing of an anniversary date or upon the conditions set out in certain mortgage products. Please refer to your mortgage documents, log into My Mortgage or contact our customer service team at 1.888.488.0794 for more information.

There are other charges that could potentially apply when paying down or paying off your mortgage:

If you prepay your mortgage in full, you may be charged an administration fee for the preparation of the discharge documentation.
If you received cash back with your loan and are prepaying your mortgage in full, you may be required to reimburse a portion of the cash back amount.

Questions?

For questions about these charges, please contact Customer Service at 1.888.488.0794 from 8:30am to 8:00pm (EST), Monday through Friday.

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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