The low-interest-rate environment enticing many homeowners to switch mortgages is a perfect opportunity for brokers to coach their clients on how to avoid steep penalties.

Rates are only half the picture: Brokers can help clients determine if a low interest rate is worth breaking an existing mortgage and absorbing the accompanying penalties.”

The current rate environment is bringing that point home, with the penalty for getting out of fixed-rate mortgage before the end of the term dependent on the difference between the mortgage`s interest rate and the current rate but also on the length of the outstanding term.

In some instances these outrageous IRD calculations result in borrowers racking up penalties.

Banks generally calculate IRD by simply getting the difference between the rate the borrower has on a loan and the current market rate.