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How can I estimate my prepayment charges?

Prepayment charges are generally calculated in two ways:
 

Step 1

As a 3 month interest penalty.

Step 2

As an interest rate differential.
 

Tangerine always charges a 3 month interest penalty for variable rate mortgages, and the higher of the two prepayment charge methods on a fixed rate mortgage. Our mortgage prepayment calculator can also help you out.
 

Using the following information, here is how the penalty is calculated with the 3 month interest method and the Interest Rate Differential method:
 

Mortgage balance remaining: $100,000
 

Current interest rate: 3.49%
 

Remaining term: 2 years from the original 5 year fixed term
 

Tangerine’s 2 year fixed interest rate: 3.25%
 

This is calculated using the following formula:
 

(Current interest rate × Mortgage balance remaining) ÷ Total months in the year (12) × three (3) months
 

(3.49% × $100,000) ÷12 × 3 = $872.50 is the estimated 3 month interest penalty.

This is calculated using the following formula:

Step 1

Calculate Differential Interest Rate:

Differential Interest Rate= Current interest rate - Tangerine comparison interest rate based on the remaining term.
 

3.49% - 3.25% = .24% is the Differential Interest Rate

Step 2

Using Differential Interest Rate, calculate the prepayment charge:

Differential Interest Rate × Mortgage balance remaining × Remaining term
 

(0.24% X $100,000) × 2= $480.00 is the Interest Rate Differential penalty.


In this example, the 3 month interest penalty is higher than the Interest Rate Differential. Therefore, this is what would be applied.
 

Note: The above calculations are estimates and present an approximate projection of the actual penalty amount. Please contact Tangerine for exact prepayment charges.