The basic Penalty Calculator gives you a fast, fair estimate. The advanced options dial it in to a much more accurate number - closer to what the lender will actually quote.
Why Advanced Options Matter
The penalty calculation uses a comparison rate to figure out the differential. Without advanced options, we use the lender's monthly average posted rate as the fallback. With the discount rate, we can reconstruct the exact posted rate the client signed at, which is what the lender's calculation uses.
The difference can be hundreds or thousands of dollars on a big mortgage.
Cashback
If the client received cashback at signing, the lender will typically claw it back as part of breaking the mortgage. Add the cashback amount in the advanced options so we can factor it in:
- We add the cashback to the effective penalty.
- Your net savings number reflects the true cost of breaking.
Discount Rate
The discount rate is the difference between the lender's posted rate at signing and the discounted rate the client actually got. It's the most powerful single input:
- We add it back onto the current rate to reconstruct the exact posted rate the client signed at.
- That's the rate the lender will use in their own penalty math.
- Some lenders use the discount rate as their comparison rate (which favours the client); others use the posted rate (which favours the lender - bigger penalty). Knowing it lets us match the right lender-specific math.
- Without it, we fall back to the monthly average posted rate, which is close but not exact.
If you know it (it's on the client's mortgage documents), enter it. If you don't, we default to a reasonable estimate.
When To Use Advanced Options
- Always, if you have the data - there's no downside.
- Especially for large mortgages where a few basis points of error become thousands of dollars.
- For meeting prep when the client wants a specific number they can rely on.
What To Do Next
- See the full lender comparison: Comparing Lender Options.
- Understand lender-specific math: Lender-Specific Penalty Math.