Understanding mortgage prepayments and charges

Understanding Mortgage Prepayments

Some homeowners find themselves able to pay off their mortgage early, or they wish to break their current mortgage. However it's not always easy to make sense of a mortgage provider's prepayment charges.

Since we understand that being mortgage-free is an important goal for many of our clients, Scotiabank has established some of the most competitive prepayment terms among the other financial institutions. For example, all of Scotiabank's mortgages include prepayment privileges and unique Match-a-Payment® options.

To help customers make informed decisions, we provide a user-friendly guide, What You Need To Know About Mortgages & Mortgage Prepayment Charges (PDF: 68 kb), which includes a glossary of commonly used mortgage terms, provides a mortgage type comparison and suggests ways you can pay off your mortgage faster without having to incur a prepayment charge. It also explains how prepayment charges are calculated and options available that would not require any prepayment charges to be collected.

We also offer the Mortgage Prepayment Charge Calculator to estimate an approximate prepayment charge that would be applicable as of today's date. You can change the information you enter such as prepayment amount, or the remaining term, so you can see how these changes can affect a prepayment charge.

To use the calculator, you should gather the following information:

  • Mortgage Contract
  • Cost of Borrowing Disclosure Statement
  • Repayment Terms Confirmation Letter (mailed to you after the closing date)
  • Most recent Renewal Agreement
  • Your Annual Mortgage Statement

Keep in mind that there are many ways to pay off your mortgage faster, by taking advantage of regular prepayment options that may be included in your existing mortgage agreement. For example, depending on the options you select for your mortgage, you can choose to repay up to 10%, 15% or 20% of the original principal amount of your mortgage at any time during each year of the term. This is a great option if you find yourself with extra money, such as a tax refund, monetary gift or inheritance.

To learn more about these options, talk to a Scotiabank Advisor or read our Own a Home, Not a Mortgage article.