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Penalty Protector
Pro

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TFC’s Fixed Mortgage Penalty Monitoring Service
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If you have a fixed-rate mortgage, your penalty risk can change dramatically depending on rates, time remaining, and your lender’s IRD formula.

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Penalty Protector Pro is a TFC-exclusive service built to help clients monitor penalty exposure at major Canadian banks—at a high level—so you can make smarter decisions before you refinance, break, or restructure.

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Talk to us today about how Penalty Protector Pro can support your mortgage plan.

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An Industry Exclusive
The Ability to Harness Information

Your Guardian in the Mortgage Maze.

Mortgage penalties in Canada—especially on fixed-rate mortgages—are often unclear until you’re already in the process of making a change.

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Penalty Protector Pro is designed to provide ongoing awareness so you’re not caught off guard by:

  • Interest Rate Differential (IRD) penalties

  • Three-month interest penalties (where applicable)

  • Lender-specific penalty calculations and quirks

  • Timing issues that can materially change outcomes

 

Our goal is simple: clarity before commitment.​​

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Why This Matters to Your Mortgage Plan

Knowing your options and understanding your penalty structure is critical—because the cost to break a mortgage can be the difference between:

  • A refinance that makes sense

  • And a refinance that looks good until the penalty shows up

 

Penalty Protector Pro exists to help you stay informed so you can plan proactively—not react under pressure.

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IRD Explained (Plain English)

The Interest Rate Differential (IRD) is a common penalty method on Canadian fixed-rate mortgages. In general terms, it can apply when:

  • You break your mortgage early, and

  • Interest rates have dropped since you took the mortgage, meaning your lender may “lose” interest revenue if they re-lend at a lower rate.

 

Penalty outcomes vary significantly by lender and timing, which is why monitoring matters

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Get the Free Mortgage Penalty Cheat Sheet

If you want a quick reference that explains the basics, start here:

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DOWNLOAD YOUR FREE MORTGAGE PENALTY CHEAT SHEET HERE!

Information and Definitions

 

  • Why is this important?

    • Knowing your options and penalty structure is critical to your Mortgage Plan! ​

  • Interest Rate Differential (IRD): 

    • The Interest Rate Differential (IRD) on a Canadian fixed-rate mortgage is a type of penalty that may be charged to a borrower who decides to pay off or refinance their mortgage before the end of its term. The IRD is calculated when the interest rates have dropped since the time the mortgage was taken out, and the lender stands to lose interest income if the mortgage is paid off early and the funds are then lent out at a lower current rate.

      • The IRD is essentially the difference between:

        • The interest rate on your existing mortgage: This is the rate you agreed to pay when you signed your mortgage contract.

        • The current interest rate that the lender can charge today for a mortgage term similar to your remaining term: This is usually based on the rate the lender could earn if they were to re-lend the funds at current market rates for the remaining duration of your original term.

    • The formula for calculating the IRD can vary between lenders but generally involves the following steps:

      • Determine the remaining balance on your mortgage.

      • Calculate the difference between your mortgage's interest rate and the current market rate for a term similar to your remaining term.

      • Multiply this rate difference by the remaining balance.

      • Multiply the result by the remaining term of your mortgage (in years or months, depending on how the lender calculates it).

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