Mortgage Refinance Calculator 2026

Refinancing means breaking your current mortgage before the term ends and replacing it with a new one. Because you are ending the contract early, your lender charges a prepayment penalty, and that penalty is what decides whether the move is worth making. Everything else is arithmetic around it.

Canadian lenders calculate the penalty two ways and charge whichever is greater. On a variable-rate mortgage it is three months' interest, which is usually modest and predictable. On a fixed-rate mortgage it is the interest rate differential — the difference between your rate and the lender's current rate for the remaining term, applied to your balance. The IRD can be an order of magnitude larger than three months' interest, and how each lender computes it varies enough that two lenders with the same posted rates can quote materially different penalties on the same mortgage.

The number that matters is the break-even point: the penalty plus closing costs divided by the monthly saving. If the break-even lands well inside your remaining term, refinancing is usually worth it. If it lands past the maturity date, waiting for renewal — where there is no penalty at all — is almost always the better answer.

Refinancing in Canada is also capped at 80% of your property's current appraised value. Above that threshold, default insurance is unavailable on a refinance, so the equity you can access is limited regardless of how much you have built. If you need to go beyond 80%, a second mortgage behind your existing first is the usual structure, priced higher because it sits in second position.