Managing your mortgage
Learn how to pay down your Desjardins mortgage faster or in full, or in situations where you have to pay a mortgage prepayment penalty.
- Pay down your mortgage faster or in part
- Pay off your mortgage
- Move before the end of your mortgage term
- Payment holiday
- Mortgage glossary
Pay off your mortgage
You can pay off your mortgage at any time, but closed mortgages have a prepayment penalty when you do.
If you have a closed mortgage, you can prepay it any time, if you also pay a charge or penalty as follows, depending on the type of your mortgage:
Reduced Variable-Rate Mortgage, Protected Variable-Rate Mortgage, and Yearly Rate Resetter Mortgage
The charge or penalty is 3 months' interest calculated on the prepayment amount.
Closed Fixed-Rate Mortgage
The charge or penalty is the higher of the following:
- 3 months' interest calculated on the prepayment amount
or - the interest rate differential (IRD)
The following table illustrates how the charge is calculated for prepayments in full, depending on the type of mortgage.
| Balance (prepayment amount) | $100,000 |
| Interest rate | 6% |
| Posted interest rate corresponding to the remaining term of the mortgage1 | 5% |
| Remaining term | 2 years and 10 days, or 740 days |
| Reduced Variable-Rate Mortgage, Protected Variable-Rate Mortgage, and Yearly Rate Resetter Mortgage | Closed Fixed-Rate Mortgage | |
|---|---|---|
| Calculation based on 3 months' interest2 | Interest costs for 1 year: (mortgage balance) x (mortgage rate) = $100,000 x 6% = $6,000 Interest costs for 3 months: $6,000 ÷ 12 x 3 = $1,500 charge or penalty |
Interest costs for 1 year: (mortgage balance) x (mortgage rate) = $100,000 x 6% = $6,000 Interest costs for 3 months: $6,000 ÷ 12 x 3 = $1,500 charge or penalty |
| Calculation based on interest rate differential (IRD) | N/A | Difference in interest rate: (mortgage rate) - (posted rate) = 6% - 5% = 1% Charge or penalty: (mortgage balance) x (difference in interest rate) ÷ (365 days) x (remaining term) = $100,000 x 1% ÷ 365 days x 740 days = $2,027.40 penalty |
| Penalty | $1,500 | The higher of the 2 amounts, that is $2,027.40 |
Use the Mortgage penalty calculator to estimate your prepayment charge. Then, contact your advisor for the precise amount.
Good to know
In reality, the charge or penalty would be lower because it would be calculated by the caisse with software that uses financial principles that are to your advantage.
Important notice
On the day you prepay your mortgage in full, you can't deduct the amount prepayable without charge or penalty (15% of the initial mortgage amount). There is, however, one exception: if the mortgage balance is equal to or less than the amount prepayable without charge or penalty.
If you receive cash back when you take out or renew a mortgage and the prepayment is made before the date set out in your contract, you also have to pay a portion of the cash back amount. The cash back payment calculation method is set out in your contract3.
If you have a Yearly Rate Resetter Mortgage and you received a lower interest rate for the first year of the term, you also have to pay a portion of the interest savings you incurred because of the reduced rate4.
- If you received an interest rate reduction (e.g., 0.50% per year), the posted rate is reduced by the same percentage.
- If the prepayment is made less than 3 months before the term ends, the penalty is calculated on the prepayment amount for the remaining term of the mortgage, at the mortgage rate.
- The cash back payment is calculated in proportion to the remaining term as opposed to the full duration of the term.
- The amount of interest savings to be paid back is calculated in proportion to the remaining term of the mortgage as opposed to the full duration of the term.
If you have a Desjardins open mortgage, you can prepay it in full any time, without charge or penalty.
This type of mortgage is usually chosen by homeowners who intend to move or pay off their mortgage before the end of the term.
You could get a full or partial refund of your mortgage penalty. See Move before the end of your mortgage term or talk to your caisse advisor, who will help you take the next steps and make the best decisions.
N.B.: This text was simplified to achieve optimal clarity so some secondary details were omitted. It bears no legal value. Please refer to the contracts you signed with the caisse to ascertain your rights and obligations pertaining to this information.
