The interest rate differential is calculation method lenders will use to break your mortgage early if needed.  Simply put, depending on how far you are in the term of your product,  they will equate the “Interest Rate Difference” using the remaining balance on the term compared to current rates and the balance of interest owing.  Be careful!  Lenders are very crafty in their calculation methods and rarely disclose properly upfront how much it will cost you to break your mortgage.  Many “low rate” products have the worst IRD calculation, costing you thousands!  Watch this video for a good understanding.