Mortgage Refinance Calculator Canada
Compare a Canadian mortgage refinance against staying with the current loan. The model checks the new payment, penalty, fees, remaining balances, home-equity limit, and the month when the refinance becomes net positive after slower or faster principal repayment is counted.
See the Canadian mortgage formula, refinance boundaries, and source trail
Formula and rounding
For the fixed-rate convention, the quoted nominal annual rate is converted from semi-annual compounding to the selected payment-period rate. The payment uses A = P × r(1+r)n ÷ ((1+r)n – 1). Variable-rate mode uses monthly compounding. Displayed money is rounded to cents or whole dollars; the model retains unrounded values internally.
Model constants
Model: NH-MRC-CA-2.0. Source review: 2026-07-12. The standard home-equity planning ceiling is 80% of the entered home value. This is a screening boundary, not an approval promise.
Included
Current and refinanced principal-and-interest payments, payment frequency, rate-compounding convention, cash-out, fee treatment, mortgage penalty, balance at the chosen hold date, loan-to-value, equity-adjusted break-even, and net value at the hold date.
Not included
Property tax, insurance, lender underwriting, credit score, debt-service ratios, appraisal outcome, tax consequences, investment return on cash-out, changing future rates, portability, blend-and-extend offers, cashback repayment, or lender-specific penalty formulas.
The penalty and actual refinance costs must be confirmed with the lender. If any formula or source appears wrong, send a correction.
Build the stay-versus-refinance comparison
Use the balance and rate from your statement, the penalty supplied by your lender, and a realistic hold date. Choose how each quoted rate compounds and whether refinance costs are paid now or added to the new mortgage.
Use the mortgage statement and lender payout quote, not guesses
The balance, remaining amortization, and current rate should come from the latest mortgage statement. Ask the lender for a dated payout or penalty quote before treating the result as decision-ready. FCAC notes that breaking a closed mortgage can involve a prepayment penalty plus administration, appraisal, reinvestment, discharge, registration, or cashback-repayment costs.
- Choose the rate convention that matches each mortgage contract: semi-annual for the fixed-rate model or monthly for the variable-rate model.
- Enter fees separately from the mortgage penalty so the cost hurdle remains auditable.
- Select whether those costs are paid from cash or added to the new mortgage. The second choice increases principal and interest.
- Use the date you may sell, move, renew, or refinance again as the hold period. A 25-year amortization is not a 25-year commitment to this exact loan.
A federally regulated lender may apply qualification rules to a refinance. The OSFI minimum qualifying rate currently uses the greater of the contractual rate plus 2% or the 5.25% floor for uninsured mortgages. Use the Mortgage Stress Test Calculator Canada as the next qualification screen.
A payment-only break-even can reward slower principal repayment
The common shortcut divides penalty and fees by monthly payment savings. That is useful for cash flow, but it can make a refinance look profitable when the new payment fell mainly because the amortization was stretched.
This model runs both amortization paths to every month in the selected hold period. At each point it compares cumulative payments and the mortgage balances still owing. Cash-out is added back only to neutralize the extra cash received at closing; it is never labelled as refinance savings.
Equity-adjusted value = current payments – refinance payments + current remaining balance – refinance remaining balance + cash-out received – upfront costs.
If costs are rolled into the new mortgage, they are not subtracted twice. They appear in the larger refinanced balance and the interest charged on that balance. Break-even is the first month when the equity-adjusted value reaches zero or higher.
Five-year refinance test: lower payment, but a higher balance
Start with a CAD 420,000 fixed mortgage at 5.89%, 22 years remaining, and monthly payments. Compare it with a 4.79% fixed refinance over 25 years. The penalty and fees total CAD 9,700 and are paid upfront. The home is entered at CAD 700,000, there is no cash-out, and the planned hold period is five years.
| Decision line | Stay | Refinance |
|---|---|---|
| Monthly payment | CAD 2,824.16 | CAD 2,392.78 |
| Payment change | CAD 431.39 less per month | |
| Mortgage balance after five years | CAD 365,309.91 | CAD 370,493.10 |
| Penalty and fees | CAD 0 | CAD 9,700 upfront |
| Equity-adjusted break-even | Month 27 | |
| Net value after five years | Refinance ahead by about CAD 11,000 | |
The simple payment-only shortcut reaches break-even earlier, around month 23. The model waits until month 27 because the refinanced mortgage balance falls more slowly. That four-month gap is the reason this page exists separately from the standard Mortgage Payment Calculator Canada.
Check the penalty, 80% home-value ceiling, and exit date together
Penalty, amortization, and fee choices that create a false win
- Using the posted penalty from months ago. The payout amount can change. Obtain a fresh lender quote.
- Comparing different compounding conventions as if they were identical. Match each quote to the fixed or variable convention in the contract.
- Calling rolled fees free. They avoid a cash payment today, but increase the mortgage balance and interest.
- Ignoring the balance at the exit date. A lower payment can coexist with less equity because the new amortization is longer.
- Treating cash-out as savings. It is borrowed money secured by the home. The model neutralizes the cash received when measuring refinance value.
- Assuming the 80% screen guarantees approval. Property appraisal, income, debts, credit, insurer rules, and lender policy remain outside this model.
Questions to verify with the lender before refinancing in Canada
The model also counts the difference between the two remaining mortgage balances. If the refinance amortization is longer, principal may fall more slowly, so payment-only break-even arrives too early.
That is a cash-flow choice, not a free-cost choice. Rolled costs increase the refinanced principal and accrue interest. Compare both treatments before accepting a quote.
No. It is a home-equity planning boundary based on FCAC guidance. The lender may use a different appraised value and will still assess income, debts, credit, mortgage type, and its own underwriting rules.
The periodic rate depends on the compounding convention. The fixed-rate option converts a nominal annual rate compounded semi-annually; the variable-rate option converts a nominal annual rate compounded monthly.
The refinance has not recovered its entered costs and remaining-balance disadvantage by that date. Ask whether waiting for renewal, negotiating a lower penalty, or keeping the current mortgage creates a cleaner outcome.