should you refinance?
Does Refinancing Make Sense?
Refinancing can lower your payment or roll high-interest debt into your mortgage, but breaking your current mortgage has a cost. Enter your numbers and we will estimate whether it is worth it, with a clear break-even and savings.
Estimate only, based on the numbers you entered and standard monthly-compounding math. Actual lender penalties, closing costs, and payments may differ. Not financial advice.
How this tool works
Should I refinance? The method behind the numbers
This tool compares what you pay now against what you would pay after refinancing, so you can see whether the change is worth the cost of making it. Everything below is the actual calculation, not a summary of one.
What you put in
- Current balance. What you still owe today, not the original amount borrowed.
- Current rate and remaining term. The rate on your existing mortgage and how long is left in the term, which is what drives any penalty.
- New rate and amortization. The rate you are comparing against, and the period over which the new mortgage would be repaid.
- Costs. Penalty, legal, appraisal, discharge and registration, because a refinance that ignores these looks better than it is.
How the payment is calculated
Canadian fixed-rate mortgages are compounded semi-annually, not monthly. That distinction is small per payment and large over a term, so this tool converts the nominal annual rate into an effective monthly rate before doing anything else.
effective monthly rate r = (1 + j / 2) ^ (2 / 12) − 1
Payment = P × r / (1 − (1 + r) ^ −n)
where P is the balance and n is the number of monthly payments
A worked example
A $500,000 balance at 5%, amortized over 25 years, gives 300 monthly payments. Using semi-annual compounding the effective monthly rate is about 0.4124%, and the payment is $2,908.02.
Calculated the common but incorrect way, dividing 5% by 12, the same mortgage appears to cost $2,922.95 a month. That is $14.93 too high every month, or roughly $896 over a year and about $4,478 across a five-year term. It is exactly the kind of error that makes a refinance look worse than it is.
What this tool cannot tell you
- Whether a lender will approve you. Qualification depends on income, credit, the property, debt service ratios and the qualifying rate, none of which this tool assesses.
- Your actual penalty. Interest rate differential penalties vary by lender, by the comparison rate they use and by how much term remains. Only your lender can give you the real figure.
- Whether the new rate is available to you. Rates shown in a comparison are assumptions you enter, not offers.
- Variable-rate behaviour. A variable payment can move during the term, and this calculation assumes a fixed rate.
Semi-annual compounding is the standard basis for Canadian fixed-rate mortgages. Educational estimate only, not an approval, a commitment or a personalised recommendation. Reviewed 30 August 2026 by Fusion Mortgage Group, a team of licensed mortgage brokers with BRX Mortgage Inc., Mortgage Brokerage #13463.
Next step
Ready to see what refinancing actually costs you?
This tool points you in a direction. We will run your real balance, your real penalty and your real options, so you know whether the move pays for itself.
Want the full picture? Read our guide to refinancing