How this calculator works
The estimate compares three months of simple interest with a simple interest rate differential for a closed fixed-rate mortgage. Closed variable-rate mode uses three months of interest; open mode reports zero penalty. For partial payments, unused annual privilege reduces the chargeable amount. Full payout treatment is selectable because contracts differ. Supply the lender's comparison rate after any posted-rate discount adjustment. Discharge and administration fees are excluded.
Formula
Annual privilege = original principal × privilege percentage. Unused privilege = max(0, annual privilege - used). Three-month interest = chargeable prepayment × contract rate / 4. Simple IRD = chargeable prepayment × max(0, contract rate - comparison rate) × days remaining / 365.25. Fixed-rate penalty estimate = max(three-month interest, IRD).
Worked example
On a full $200,000 payout at 6%, three months of interest is $3,000. With a 4% comparison rate and exactly three years remaining, simple IRD is $12,000. The fixed-rate estimate is therefore $12,000 before fees.
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Frequently asked questions
Is this the lender's exact quote?
No. Contract wording, original rate discounts, present-value calculations and the lender's day count can change the result. Request a payout statement.
Does unused privilege always reduce a full payout?
No. The separate full-payout option lets you match the contract instead of assuming the allowance applies.
When does the annual privilege reset?
It may follow a calendar year, mortgage anniversary or another period. Enter the amount used in the allowance year that your agreement defines.