Refinance Break-Even Calculator

How this is calculated

Both payments use Canadian fixed-rate math: the annual rate compounds semi-annually, so the effective monthly rate is i = (1 + annual rate ÷ 2)^1/6 − 1, and the payment is P = L × i ÷ (1 − (1 + i)⁻ⁿ). The current payment uses your balance, current rate, and remaining months. The new payment uses the same balance, the new rate, and the new amortization in months. Monthly savings is the difference, and the break-even is the total switching cost divided by those savings: (penalty + other costs) ÷ monthly savings.

The break-even answers one question: how long must you stay in the new mortgage before the lower payment has repaid what it cost you to switch? If the monthly savings are zero or negative, refinancing never breaks even on payment alone, and the tool says so instead of dividing by zero.

Keep these limits in mind:

• Refinancing usually resets the amortization, so a longer term can lower the payment while increasing total interest.
• A lender may roll the penalty and fees into the new mortgage, which raises the balance and the payment.
• Break-even ignores the time value of money, tax effects, and any change in how fast you build equity.

All figures are estimates for planning only, not a quote, pre-approval, or approval. Confirm the exact penalty, fees, and rate with your lender before you decide.