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Why do banks generally charge a much lower penalty if the mortgage agreement on a variable rate mortgage

 
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Why do banks generally charge a much lower penalty if the mortgage agreement on a variable rate mortgage?
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    Q. What is ird penalty when breaking a mortgage and do banks apply this type of penalty in the mortgage contract?


    IRD or Interest Rate Deferential is a formula the banks use to calculate mortgage penalty if you decide to break the mortgage with your current lender. The IRD formula is used in a case where the current posted rates are lower then your mortgage rate. This is done in order to have a bigger penalty if you are breaking your mortgage for a better rate.

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    Q. What is the penalty for going to a much lower ported mortgage?


    Guess no one knows....

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    Can you help us by answering one of these related questions?
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