Request a written payout statement, add every switching cost, calculate savings over the period you expect to keep the new mortgage and identify the break-even month.
Use the lender’s actual payout figure
Closed mortgages may use three months’ interest, an interest-rate differential or another contract calculation. The method can vary between fixed and variable mortgages and between lenders.
Online penalty estimates are only a starting point. Ask for a written statement using the intended payout date and current balance.
Add costs before claiming savings
- Discharge, assignment or administration charges.
- Appraisal, legal and registration work.
- Cashback repayment or promotional clawback.
- Interest adjustments and a possible longer amortization.
Compare total interest and cash flow over a realistic time horizon—not only the first monthly payment.
Check alternatives
Porting, blending or using existing prepayment privileges may achieve part of the goal without a full break. If the purpose is debt consolidation, compare a refinance with other secured borrowing and a clear repayment plan.
If the break-even date comes after a likely move or sale, waiting for renewal may be more sensible.
Frequently asked questions
How do I know the penalty?
Request a current written payout statement from the lender.
What is break-even?
It is the point when accumulated savings recover the penalty and switching costs.
Can I port the mortgage?
Some mortgages are portable, subject to timing, property and qualification rules.