1. What is an RBC Mortgage Prepayment Calculator?

Definition: This calculator estimates the prepayment penalty you might incur when paying off your RBC mortgage before the term ends.

Purpose: It helps homeowners understand potential costs associated with mortgage prepayment at RBC.

2. How Does the Calculator Work?

The calculator uses one of two formulas:

Where:

• \( P \) — Mortgage principal balance (CAD)
• \( r \) — Annual interest rate (decimal)
• \( 3 \) — Standard penalty period (months)
• \( \text{IRD} \) — Interest rate differential amount (CAD)

Explanation: RBC typically charges the greater of 3 months interest or the interest rate differential when you break your mortgage.

3. Importance of Prepayment Penalty Calculation

Details: Understanding potential penalties helps in financial planning when considering refinancing, selling, or making large prepayments.

4. Using the Calculator

Tips: Enter your mortgage principal, interest rate, select penalty type (3 months interest or IRD), and provide IRD amount if known.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between 3 months interest and IRD?
A: 3 months interest is a simple calculation while IRD is more complex and based on current rates vs your rate.

Q2: When does RBC use IRD instead of 3 months interest?
A: Typically when fixed rates have fallen since you got your mortgage, making IRD the larger amount.

Q3: How can I find my exact IRD amount?
A: Contact RBC mortgage specialists for an exact prepayment penalty quote.

Q4: Are there prepayment options without penalty?
A: RBC allows limited annual prepayments (usually 10-20% of principal) without penalty.

Q5: Does this calculator work for variable rate mortgages?
A: Variable rate mortgages typically use 3 months interest only for penalties.