1. What is Mortgage Prepayment Penalty?

A mortgage prepayment penalty is a fee charged by lenders when you pay off your mortgage before the end of its term. CIBC typically charges the greater of either three months' interest or the interest rate differential (IRD).

2. How Does the Calculator Work?

The calculator uses CIBC's prepayment penalty formula:

Where:

• \( IRD \) — Interest Rate Differential (based on your rate vs current rates)
• \( \text{3 Months Interest} \) — Three months of interest on your current mortgage

Explanation: CIBC will charge whichever amount is higher between these two calculations when you break your mortgage.

3. Understanding CIBC's Penalty Calculation

Details: The actual IRD calculation can be complex and depends on factors like your original rate, current rates, and remaining term. This calculator provides an estimate.

4. Using the Calculator

Tips: Enter your current mortgage principal, interest rate, remaining term, and select the penalty type you want to calculate. For accurate IRD, consult your mortgage agreement or CIBC representative.

5. Frequently Asked Questions (FAQ)

Q1: When does CIBC charge prepayment penalties?
A: When you pay off your mortgage in full before the term ends, make prepayments beyond your allowed limits, or refinance.

Q2: How is three months interest calculated?
A: It's three months of interest payments based on your current mortgage balance and interest rate.

Q3: What factors affect the IRD calculation?
A: Your original rate, current rates for similar terms, remaining time in your mortgage, and your principal balance.

Q4: Are there ways to reduce prepayment penalties?
A: Some options include porting your mortgage, waiting until renewal, or making partial prepayments within allowed limits.

Q5: Is this calculator exact for my situation?
A: This provides an estimate. For your exact penalty, contact CIBC as they have access to all details of your mortgage.