Mortgage · Refinance
Refinance break-even rate calculator.
Most refinance calculators start from the new rate and tell you the break-even month. This one starts from your costs and the time you will stay, and works backwards to the highest new rate that still pays for itself. Remortgage is the UK word for the same thing.
Break-even rate = the new rate at which (old payment − new payment) × months you will hold the mortgage equals your penalty plus costs. On $400,000 at 5.50% with 25 years left, $6,000 of costs and a 3-year hold, you need a new rate of about 4.77%, a drop of 0.73 points. Counting interest actually saved instead of the payment, it is about 4.98%.
Inputs
The rate you need
Fill the form and press Calculate.
How the break-even rate is found
The new mortgage is the same balance over the same remaining amortization, so only the rate changes. The tool tries rates between 0% and your current rate and finds the highest one where the saving over your hold period is at least your costs. Two versions are shown. The payment basis is the usual rule of thumb: (old payment − new payment) × months held. The interest basis counts the interest actually saved over those months, which is a little more generous early in a mortgage because a lower rate also changes how fast the balance falls. Rates compound half-yearly, the usual fixed-rate convention under Interest Act s. 6.
Worked example. $400,000 at 5.50% with 25 years left costs $2,441.57 a month. Costs of $6,000 ($4,500 penalty plus $1,500 of fees) held for 36 months need $166.67 a month of payment saving, which a rate of about 4.77% delivers. A 1-point drop to 4.50% saves $227.67 a month and breaks even in month 27; a 0.5-point drop to 5.00% saves $115.15 and takes 53 months, longer than a 3-year hold, so it does not pay.
Where the costs come from
FCAC says the prepayment penalty will usually be the higher of 3 months’ interest on what you owe and the interest rate differential, and that you may also pay administration, appraisal, reinvestment and discharge fees. FCAC also suggests waiting until the end of your term if the penalty will be a large amount, since you can then prepay without one; with no costs at all the break-even rate is simply your current rate.
For the full refinance picture (monthly saving, lifetime saving, the 80% limit) use the mortgage refinance calculator; for what a lender might charge to break the term, the IRD penalty calculator.
Sources, read 15 October 2026: FCAC — Mortgage fees: Prepayment penalties (15 October 2025); FCAC, Breaking your mortgage contract (15 October 2025); Interest Act s. 6 (compounding).
Frequently asked questions
How do I calculate the break-even point on a mortgage refinance?
Divide your total costs (penalty plus fees) by the monthly payment saving, rounded up to a whole month. This page works the other way: from your costs and how long you will stay, it finds the new rate that makes the break-even land inside that time.
What is a remortgage calculator?
Remortgage is the UK term for replacing a mortgage with a new one, which Canadians call refinancing (or switching, if only the lender changes). The break-even maths is the same.
Is it worth breaking my mortgage to get a lower rate?
Only if the saving over the time you will keep the new mortgage is more than the penalty and costs. If the table says No in the last column for the drop you can actually get, the refinance does not pay inside your hold.
What costs should I include?
FCAC lists a prepayment penalty and, if applicable, administration fees, appraisal fees, reinvestment fees and a mortgage discharge fee, and you may have to repay any cash back. Add your legal costs too.
Why are the payment and interest answers different?
A lower rate lowers the payment and also means less of each payment is interest. The payment basis is the common shortcut; the interest basis counts what you actually save in interest over the months held.
Does this include a longer amortization?
No. It assumes the same remaining amortization so the saving comes from the rate alone. Stretching the amortization lowers the payment but adds interest; see the renewal payment shock calculator.
Estimate only — confirm with your lender
This tool illustrates the arithmetic with a penalty, costs and rates you type. It does not know your lender’s terms, the rate you would really be offered or what you will do with the property, and a refinance can change more than the rate. Confirm every figure with your lender.