Mortgage refinance break-even calculator

FCAC's rule of thumb: a closed fixed-rate mortgage charges the greater of three months' interest or the interest rate differential (IRD); a closed variable typically charges three months' interest. The trap is the big banks' IRD method — computed from their posted rates minus your original discount, which inflates penalties dramatically when rates have fallen. This page defaults to a three-months'-interest estimate; for the real number, run your exact terms through our penalty calculator and confirm with a payout statement from your lender, which is the only binding figure.

FCAC lists them plainly: discharge, registration, transfer and/or assignment fees from your current lender, plus an appraisal fee. The discharge fee is lender-set — typically $0–$400, capped in some provinces — and the professional (lawyer/notary) work usually runs $400–$2,500. Two mitigations: many new lenders will pay some or all switching costs to win your mortgage (FCAC explicitly suggests asking), and collateral-charge transfers can sometimes skip the registration step. Our $1,500 default is a middle-of-road combined figure — replace it with your quotes.

Depends what you're doing. A straight switch — same loan amount, same amortization, just a new lender — has been exempt from the minimum qualifying rate since November 21, 2024 for uninsured mortgages (OSFI's change). A true refinance — borrowing more or stretching the amortization — still triggers the full test at the greater of your new rate + 2% or 5.25%. If you're near the qualification edge, that distinction decides which options are even on the table; the stress-test calculator shows the hurdle.

This calculator rolls it in, because that's what most people do — but understand the cost: you're financing the penalty at your mortgage rate for the rest of the amortization, so a $7,000 penalty quietly becomes $9,000+ of payments over 20 years. Paying cash keeps the new balance clean and shortens the break-even. Either way, the break-even month shown is the honest test: if it lands after your renewal date, the refinance never pays for itself — you'd hit renewal (where switching is free) before recouping the costs.

Your current lender may offer to blend your existing rate with today's rate for a new term — no penalty, but no full benefit either: the blended rate sits between the two, and FCAC notes you'll usually still pay fees and the lender must disclose how the blend is calculated. It's the convenient middle option, and exactly because it's convenient, run the numbers: compare the blended offer against this page's break-even math before assuming it's the better deal.

Three honest patterns: (1) the rate gap is large and your remaining term is long — costs amortize over many months of savings; (2) you're consolidating high-interest debt into the mortgage — a different calculation where even a poor mortgage break can beat 21% card interest; (3) you need to restructure (longer amortization for cash flow, pulling equity). The clearly-bad pattern is breaking with under a year to renewal for a modest rate gap — the penalty rarely pays back before you could switch for free. The verdict card above is precisely that test.