Prepayment penalty estimator

Worked example. A $420,000 balance at 5.34% with 31 months left, when the lender now offers 4.19% for a similar term: three months' interest is $5,607, the interest rate differential is $12,477, so the lender charges about $12,477. On a mortgage more than five years old, section 10 of the Interest Act caps the penalty at three months' interest.