There is a penalty involved, here is what I found directly on CIBC bank website. "The interest rate differential amount is the difference between the Interest on the Prepaid Amount for the remainder of the term at the posted rate at the time you took out the mortgage, and interest on the Prepaid Amount for the Remainder of the Term using a Comparable Posted Rate. Interest is calculated at the interest rate posted by CIBC for a mortgage product similar to your mortgage product on the date the payout statement is prepared."