Mortgage Refinance Calculator
See whether refinancing to a lower rate is worth the penalty. We calculate your new payment, monthly savings, and exactly when you'll break even.
Monthly savings
Refinancing means breaking your current mortgage and starting a new one — usually to secure a lower rate, consolidate higher-interest debt, or access home equity. The key question is always the same: do your savings outweigh the cost of breaking your existing contract? This calculator answers that by comparing your current payment to the new one, subtracting the penalty and fees, and showing the break-even point in months.
How to read your break-even point
The break-even point tells you how many months of lower payments it takes to recover your penalty and refinancing costs. Suppose breaking your mortgage costs $7,500 all-in and a lower rate saves you $250 a month — you break even in 30 months. If you'll keep the mortgage well beyond that, the refinance pays off and everything after month 30 is pure saving. If you might sell, move, or hit renewal before then, it usually isn't worth it.
Mind the penalty — especially on fixed mortgages
The penalty is what makes or breaks a refinance. On a variable mortgage it's typically just three months' interest. On a fixed mortgage you'll pay the greater of three months' interest or the Interest Rate Differential (IRD) — and big-bank IRD formulas based on posted rates can run into the tens of thousands. Before you commit, get your exact penalty from your lender in writing, or estimate it with our penalty calculator; a small error here can flip a refinance from worthwhile to costly.
Refinance, renew, or blend?
Refinancing isn't your only option. If your term is nearly up, simply waiting for renewal lets you switch lenders or negotiate a lower rate with no penalty at all. Some lenders also offer a blend-and-extend, which mixes your existing rate with a new lower one and avoids breaking the mortgage outright — handy when the IRD penalty would wipe out your savings. And remember that refinancing requires you to requalify under the stress test, so confirm you still qualify for the amount you need before starting the process.
Frequently asked questions
Is it worth refinancing my mortgage in Canada?
Refinancing is worth it when the monthly savings from a lower rate exceed the penalty and costs to break your current mortgage, within a reasonable break-even period. A simple rule: if you'll keep the mortgage longer than the break-even point this calculator shows, refinancing usually pays off. If you might sell or move before then, it generally doesn't.
What does it cost to refinance a mortgage?
The biggest cost is usually the prepayment penalty to break your current term — three months' interest on a variable mortgage, or the greater of that and the Interest Rate Differential (IRD) on a fixed one. On top of the penalty you'll typically pay $1,000–$2,000 in discharge, legal or notary, registration, and sometimes appraisal fees. Some lenders offer cash-back to offset switching costs.
What's the difference between refinancing and a renewal?
A renewal happens automatically at the end of your term, when you sign a new term with no penalty and no requalification. Refinancing means breaking your mortgage mid-term — you pay a penalty, you requalify under the stress test, and you can change the loan amount to consolidate debt or pull out equity. If your term is nearly up, waiting for renewal almost always beats refinancing.
Will I have to pass the stress test again to refinance?
Yes. Refinancing is a new mortgage, so you must requalify at the federal qualifying rate — the greater of 5.25% or your contract rate plus two percentage points. If your income has dropped or your debts have grown since you first qualified, you may not be approved for the same amount, so check your numbers before committing.
Can I refinance to consolidate debt or access equity?
Yes. As long as your total mortgage stays within 80% of your home's appraised value, you can refinance for more than your current balance and take the difference in cash — often to consolidate higher-interest debt into one lower-rate payment, or to fund a renovation. Weigh the interest saved against the penalty and the fact that you're securing former unsecured debt against your home.
Related tools & guides
Penalty Calculator
Estimate the IRD or three-months'-interest cost of breaking your term.
Compare Bank Rates
See today's best fixed and variable rates before you refinance.
Prepayment Calculator
Compare refinancing against simply prepaying your mortgage.
Mortgage Calculator
Model your new payment and amortization after refinancing.
Mortgage Renewal Guide
Decide between renewing, switching, or refinancing.
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