# What is the 'IRD' penalty risk for 5-year fixed borrowers?

> The Interest Rate Differential (IRD) can cost tens of thousands if you break a fixed mortgage when market rates have dropped.

Category: Strategy
Last verified: 2026-02-18
Source: https://ratellow.com/faqs/strategy/what-is-the-ird-penalty-risk-for-5-year-fixed-borrowers

## Answer
### Section Summary

- Advice: If you plans to sell within 3 years, avoid a 5-year fixed term at all costs.
- Strategy: Use 'Adjustable' variables (where payment changes) to avoid the 'Trigger Rate' trap.

## Related guide
- https://ratellow.com/guides/lock-in-fixed-vs-variable

## Sources
- Final Capital Adequacy Requirements Guideline (2026) - OSFI — https://www.osfi-bsif.gc.ca/en/news/backgrounder-final-capital-adequacy-requirements-guideline-2026