Mortgage Refinance Calculator Canada
Breaking a mortgage early only pays when the interest you save beats the penalty and fees you trigger. This calculator compares your remaining mortgage at its current rate with a refinanced mortgage at a new rate over the same remaining amortization, with the penalty and fees rolled into the new balance, so the net saving is honest.
Canadian mortgages compound semi-annually; payments shown are monthly. Your lender calculates the actual penalty (often an interest rate differential or three months’ interest), so confirm that figure before deciding.
How it works
The calculator keeps the comparison fair by holding the remaining amortization the same on both sides. Your current payment continues on the left; on the right, the penalty and fees are added to the balance and the whole amount is re-amortised at the new rate. If the new total interest, on a bigger balance, is still lower, the refinance saves money on paper.
Cash flow is the second test. A lower monthly payment helps a tight budget even when the long-term saving is modest, while a refinance that saves interest but raises the payment can strain monthly cash flow. Check both numbers before signing.
Worked example
The calculator’s own output for a $400,000 balance with 20 years left, moving from 5.50% to 4.00%, with a $4,500 penalty and $1,000 of fees rolled in:
| Item | Amount |
|---|---|
| Balance / remaining amortization | $400,000.00 over 20 years |
| Current rate / payment | 5.50% / $2,737.57 a month |
| New rate / new balance | 4.00% on $405,500.00 (penalty + fees rolled in) |
| New monthly payment | $2,450.22 |
| Monthly payment saving | $287.35 |
| Interest left, current mortgage | $257,015.64 |
| Interest, new mortgage | $182,552.66 |
| Net interest saving | $74,462.98 |
Frequently asked questions
How is a mortgage break penalty calculated in Canada?
For a variable rate it is usually three months’ interest. For a fixed rate it is usually the greater of three months’ interest and the interest rate differential (IRD), which can be much larger when rates have fallen since you signed.
Does refinancing restart my amortization?
It can, if you choose a longer amortization, and that lowers the payment but raises total interest. This calculator keeps the remaining amortization unchanged so the rate saving is isolated; extending the amortization is a separate choice to cost out.
Can I roll the penalty into the new mortgage?
Often yes, up to your lender’s limits, which is what this calculator assumes. Rolling it in means you pay interest on the penalty itself, and the comparison above already reflects that.
When does refinancing not make sense?
When the remaining term is short, the penalty is large, or you may move again soon. The shorter the time you will hold the new mortgage, the less interest saving there is to recover the penalty.
Is a blend-and-extend different?
Yes. A blend mixes your current rate with today’s rate and usually avoids a penalty, but the blended rate is higher than a clean refinance rate. Compare the blend offer against this calculator’s net saving.
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For education only. This calculator gives estimates, not financial, tax or legal advice. Figures use 2026 rates where a rate is built in; confirm your own numbers before making a decision.
