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How can I estimate my prepayment charges?

Prepayment charges are generally calculated in two ways:

  • As a 3-month interest penalty.
  • 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
 

For example, if the interest rate is: 3.49%
 

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

Tangerine’s 2 year fixed interest rate: 3.25%
 

  1. 3-month interest penalty
  2. Interest Rate Differential penalty

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.


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.