The Penalty Calculator answers one question fast: what will it cost this client to break their current mortgage today? It's a standalone tool - useful whether the client is in your book or not.
Where To Find It
In the sidebar under Tools, click Penalty Calculator.
Inputs
Fill in:
- Lender - focus the bar and type to search by name, or browse the category-grouped list (A-Lender, Alt / B-Lender, Private / MIC, Reverse Mortgage). See Picking The Right Lender below.
- Current Rate - what the client is paying today.
- Balance - current mortgage balance.
- Months Remaining - how many months until their maturity date.
Click Calculate.
Picking The Right Lender
The lender bar is a search box. Focus it and type to filter by name, or leave it empty to browse every lender grouped by category.
The list shows only the lenders we price with the institution's own published prepayment method (around 36 of them), so the penalty those return is trustworthy. If a name doesn't appear, we can't price it first-party - the bar shows "no lenders match" and you can't calculate on a made-up name.
When the client's lender isn't in the list, scroll to the Generic estimate group at the bottom and pick a catch-all:
- General A-Lender and General B-Lender - use the standard interest rate differential (today's posted rate minus the client's original discount).
- Private Lender - uses three months' interest, the typical private-lender penalty.
Pick a generic option and the result carries a generic fallback estimate flag noting it's not a specific lender. Always confirm against the actual lender's prepayment terms.
Reading The Result
You get back:
- IRD penalty - the interest rate differential calculation.
- 3-Month Interest penalty - three months of interest at the current rate.
- Effective Penalty - whichever is higher. That's what the lender will actually charge.
IRD Vs 3-Month Interest
Lenders charge whichever is higher of these two:
- IRD wins when the client's rate is significantly higher than current rates AND they have meaningful time left on their term.
- 3-month interest wins when the client's rate is close to current rates, or when they're near the end of their term.
We tell you which one applies. For the deeper math, see Understanding IRD Math.
When The Result Is An Estimate Vs Lender-Exact
Our penalty estimate is close but not always identical to what the lender will quote. Reasons:
- The lender's internal comparison rate on the day of payout can drift slightly from public rate history.
- Some lenders apply additional fees.
- Discharge fees and admin fees aren't included in the penalty estimate.
For the most accurate estimate possible, use the advanced options - the discount rate lets us hit the exact historical posted rate.
What To Do Next
- Refine the estimate: Advanced Options In The Penalty Calculator.
- See lender options side-by-side: Comparing Lender Options.
- Save the result as a PDF: Downloading The Penalty Result And Lender Options.