How is it calculated?
Variable mortgages usually charge three months' interest. Fixed mortgages charge the greater of three months' interest and the interest rate differential (IRD).
$400,000 at 4.89%, 24 months left, lender rate 3.99%
IRD = 0.90% × $400,000 × 2 = $7,200
What should I do with the result?
Use it to set a budget or a target rate, then let lenders bid on your actual mortgage. Bids include rate, penalty method, prepayment and fees, so you can compare the full cost.
MBWritten by the MortgageBids.ca editorial team. Last updated October 7, 2026. General information only; your lender confirms terms for your file.
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