Interest Rate Differential

IRD

The penalty formula that can make breaking a fixed mortgage costly.

The interest rate differential (IRD) is a penalty formula, based on the difference between your rate and current rates, used when you break a fixed-rate mortgage early. Fixed mortgages usually charge the greater of three months' interest or the IRD, and the IRD can run to thousands of dollars. Variable mortgages typically charge only about three months' interest. If there is any chance you will move or refinance mid-term, the penalty deserves as much attention as the rate.

General information only, not legal, tax, or financial advice. Rules change and vary by province; confirm the current details with the relevant authority before you rely on them.