How the calculation picks the method
On a variable rate, the penalty is three months of interest at your contract rate. On a fixed rate, it is the higher of those three months and the interest rate differential: the gap between your rate and the lender’s comparison rate, applied to the balance for the months left.
Why the differential can be much higher
Each lender picks its comparison rate its own way. Some start from the posted rate for the remaining term, others from the discounted rate, and the gap between the two can double or triple the penalty on the same file. If you do not know the comparison rate, enter the rate the lender posts today for a term matching the months left.
What the calculation does not show
The exact formula in your agreement, discharge and legal fees, or a rate discount the lender adds to the calculation. Only the lender’s dated payout statement counts.
Next step
Send me your balance, your rate, the maturity date, and the lender’s name: I request the written amount for your date, then compare the penalty with what the change would save you.