Mortgage · Canada
Mortgage Refinance Calculator (Canada).
Compare your current mortgage with a new one. See monthly savings, break-even point, and lifetime interest difference.
Short answer. A refinance pays off when the monthly saving recovers your total cost (prepayment penalty plus legal, appraisal and discharge fees) before you sell or refinance again, and when the new loan does not stretch your amortization enough to add more interest than you save. Enter your penalty and fees below; the calculator gives the break-even month and the lifetime saving after costs. If you enter your home value it also compares your balance with the 80% limit: the FCAC says you may usually borrow up to 80% of your home’s value (page modified 15 October 2025).
Source: FCAC — Breaking your mortgage contract; FCAC — Renewing your mortgage · As of
Cite this page: TNAADO Tools, “Mortgage Refinance Calculator Canada: Break-Even, Penalty and 80% Limit”, https://tools.tnaado.ca/calculators/mortgage/refinance/
Inputs
Refinance analysis
Fill the form and press Calculate.
When refinancing makes sense
Refinancing is usually worthwhile when the new rate is at least 0.5%–1% below your current rate, you plan to stay in the home past the break-even date, and you have equity above 20% to avoid CMHC re-insurance.
Worked example: $400,000 refinanced from 6.0% to 4.5%
Take a $400,000 balance at 6.0% with 25 years of amortization left, refinanced to 4.5% over 25 years, with $3,500 of refinance costs (legal, appraisal and the like). The calculator reports a current payment of $2,559.23 and a new payment of $2,213.89, a saving of $345.33 a month. The costs are recovered in 11 months (3,500 ÷ $345.33 = 10.1, rounded up), and the lifetime saving, after costs, is $100,100.
| Scenario | Current payment | New payment | Break-even | Lifetime saving after costs |
|---|---|---|---|---|
| 6.0% to 4.5%, 25 years, $3,500 costs | $2,559.23 | $2,213.89 | 11 months | $100,100 |
| Same rates, $8,000 costs (includes a prepayment penalty) | $2,559.23 | $2,213.89 | 24 months | $95,600 |
| 6.0% with 20 years left, to 5.5% over a fresh 25 years | $2,848.75 | $2,441.57 | 9 months | -$52,269 |
- Costs move the break-even, not the monthly saving: raising the costs from $3,500 to $8,000 stretches the break-even from 11 months to 24 months while the monthly saving stays $345.33.
- The term-extension trap: in the third row the payment drops by $407.19 a month and the break-even looks quick at 9 months, yet the lifetime figure is -$52,269 because five more years of interest are added. A lower payment is not the same as a cheaper mortgage.
Next steps: put a real penalty into the cost field with the mortgage penalty calculator, see the effect of extra payments instead with the prepayment calculator, or compare terms in the mortgage payment calculator.
How this is calculated
Both payments come from the same Canadian semi-annual-compounding formula used across the mortgage tools: monthly rate i = (1 + rate ÷ 2)1/6 − 1, payment = balance × i ÷ (1 − (1 + i)−n). The calculator then reports:
- monthly saving = current payment − new payment;
- break-even months = refinance costs ÷ monthly saving, rounded up;
- lifetime saving = total interest on the current schedule − total interest on the new schedule − refinance costs, each run over its full term from today.
The cost field is only as good as what you put in it. The Financial Consumer Agency of Canada says breaking a closed mortgage normally means a prepayment penalty, which the lender usually sets at the higher of three months’ interest or the interest rate differential, and that you may also owe administration, appraisal, reinvestment and discharge fees and have to repay any cash back (FCAC, Breaking your mortgage contract; reducing prepayment penalties). Add all of them. The calculator does not model the time value of money, a different term length or rate-reset risk. Sources checked 1 October 2026.
General information, not mortgage or financial advice. Ask your lender for a written payout statement before deciding.
TNAADO Inc. · Toronto
Refinancing trades a penalty now against interest later
Breaking a mortgage mid-term for a lower rate is worth doing only if the interest saved over the remaining term exceeds the cost of getting out. That cost is the prepayment charge plus discharge, legal and appraisal fees, and registration if you change lenders. On a fixed-rate mortgage the charge is the greater of three months’ interest or the interest rate differential, and IRD formulas vary enough between lenders that the only reliable number is the one your lender puts in writing.
The mistake people make. Comparing rates and ignoring the amortization reset. Refinancing back to a fresh 25 years lowers the payment and can raise total interest even at a lower rate. The other trap is refinancing to clear unsecured debt: it converts credit-card debt into debt secured by the house, which lowers the rate and raises the stakes considerably.
Frequently asked questions
How is the refinance break-even point calculated?
It is the total refinance cost divided by the monthly payment saving, rounded up to a whole month. If the costs are $3,500 and the payment falls by $345.33, the costs are recovered in 11 months. If you expect to sell or refinance again sooner than the break-even, the refinance loses money.
What costs should I include in the refinance cost field?
Everything you will pay or give up to make the change: the prepayment penalty on your current mortgage, legal and title fees, an appraisal, discharge and registration charges, and any cash back you must repay. The FCAC lists these as the costs to find out before breaking a contract.
How is a mortgage prepayment penalty worked out?
The FCAC says the penalty will usually be the higher of three months’ interest on what you still owe and the interest rate differential (IRD). Lenders usually apply the IRD when your rate is higher than the current rate and you signed less than five years ago. The method varies by lender and by whether your rate was discounted from the posted rate, so ask for the figure in writing.
How much can I borrow when I refinance a mortgage in Canada?
You may usually borrow up to 80% of your home’s value (FCAC, Borrowing against home equity, page modified 15 October 2025). Enter your home value above to see 80% of it, your balance as a share of value, and the room left. You also have to qualify again on income and credit.
Is a lower payment always a better deal?
No. Stretching the amortization lowers the payment but adds interest. In the third scenario above the payment falls $407.19 a month while the lifetime result is -$52,269. Compare total interest, not only the payment.
Does the calculator include a blend-and-extend or early renewal?
No. It compares a straight replacement. The FCAC describes blend-and-extend, where a lender lets you extend your term before it ends, blends your old rate with the new term’s rate and does not charge a prepayment penalty (administrative fees may apply), as a separate option; model it with the blend-and-extend calculator and compare the totals.
Disclaimer
Estimates for educational purposes only. Speak to a mortgage broker about prepayment penalties before breaking your existing term.