Should you break your mortgage to refinance? Break, blend or stay
Breaking pays only if the interest you save beats the penalty and fees before your term would have ended. Enter your mortgage and this calculator estimates the penalty with your lender's published method (three months' interest or the IRD), then compares staying, refinancing now, a blend-and-extend and a HELOC over the same time frame. You get your break-even month, the rate you'd need and whether you'd pass the stress test.
- Interest saved
- Penalty + fees $10,696
Example: $510,000 at 6.24% fixed, 22 months left, a lender that uses its current rate for the penalty, refinanced at 4.58%. Open this example.
Break, blend or stay? Refinance decision calculator
Four routes, an estimated penalty using your lender's method, every fee, the same time frame. Nothing leaves your browser.
- Est. penalty
- $9,765 interest rate differential
- Break-even
- never not within 5 years
- Rate you'd need
- 4.42% for breaking to pay off
Cost of each route over 5 years (interest + penalty + fees)
| Measure | Stay until renewal | Break and refinance now | Blend and extend |
|---|---|---|---|
| Cost | $97,081 | $100,338 | $96,891 |
| Paid up front | $0 | $11,765 | $250 |
| First monthly payment | $2,705 | $2,518 | $2,611 |
| Owed after 5 years | $359,897 | $357,519 | $360,007 |
- Three months' interest
- $5,660
- Interest rate differential (5.39% − 4.46% on $420,000, 30 months)
- $9,765
- Comparison rate: posted 5.91% − your discount 1.45%
- 4.46%
- Fees on a refinance (after any lender credit)
- $2,000
- Qualifying rate on the new mortgage
- 6.58%
- Payment you must qualify at
- $2,992/mo
The penalty is an estimate from the method you picked and published rates. Only your lender's payout statement is exact.
Mitey's next step
Ask your lender for a blend-and-extend quote and how it calculates the rate (FCAC says it must tell you). Our estimate is 4.99%; if the quote is higher, enter it under "Blended rate your lender quoted".
Estimate, not advice. Educational estimate only, not financial, mortgage, tax or legal advice. Lenders, insurers and governments set their own rules and can change them; confirm with a licensed professional before you decide.
Breaking doesn't pay; blend and extend is only $191 cheaper than staying. Estimated penalty $9,765 (interest rate differential).
- Break and refinance now
- Blend and extend
Show the numbers
| Month | Break and refinance now | Blend and extend |
|---|---|---|
| Now | $11,765 | $250 |
| 3 mo | $10,932 | -$166 |
| 6 mo | $10,102 | -$581 |
| 9 mo | $9,273 | -$995 |
| 12 mo | $8,447 | -$1,408 |
| 15 mo | $7,623 | -$1,821 |
| 18 mo | $6,801 | -$2,232 |
| 21 mo | $5,982 | -$2,642 |
| 24 mo | $5,165 | -$3,050 |
| 27 mo | $4,351 | -$3,458 |
| 30 mo | $3,540 | -$3,864 |
| 33 mo | $3,511 | -$3,490 |
| 36 mo | $3,481 | -$3,117 |
| 39 mo | $3,452 | -$2,746 |
| 42 mo | $3,424 | -$2,376 |
| 45 mo | $3,395 | -$2,008 |
| 48 mo | $3,367 | -$1,641 |
| 51 mo | $3,339 | -$1,276 |
| 54 mo | $3,312 | -$912 |
| 57 mo | $3,284 | -$551 |
| 60 mo | $3,257 | -$191 |
| New rate ↓ / Months left → | 6 mo | 12 mo | 24 mo | 36 mo | 48 mo |
|---|---|---|---|---|---|
| 3.83% | −$4K | −$973 | +$2K | +$7K | +$11K |
| 4.08% | −$5K | −$2K | +$84 | +$4K | +$7K |
| 4.33% | −$5K | −$3K | −$2K | +$1K | +$3K |
| 4.58% | −$6K | −$4K | −$4K | −$2K | −$888 |
| 4.83% | −$6K | −$5K | −$6K | −$5K | −$5K |
Your saved scenarios
Saved in this browser only. Nothing is sent to us.
Assumptions & sources
Assumptions
- Penalty: the higher of 3 months' interest or the interest rate differential on a closed fixed mortgage; 3 months' interest on a closed variable one (FCAC; RBC; TD). Lender methods come from each lender's own page; posted rates are the lender's own where shown, otherwise the Bank of Canada's typical posted rates read between terms. It's an estimate.
- Posted rate when you signed: the Bank of Canada's typical big-bank posted 5-year rate that month (history from 2015). Your commitment letter shows the real one.
- Blend-and-extend: your old rate for the months left and the new rate for the extra months, weighted by time, unless you enter a quote. With cash out, the extra money is at the new rate.
- HELOC: interest-only at prime + 0.5; your mortgage continues unchanged. Limits: 80% of value for all mortgages combined (Bank Act s. 418), 65% for the HELOC (OSFI B-20).
- Stress test: the shared MITEY qualification engine: the higher of the new rate + 2 points or 5.25% (OSFI), within GDS 39% and TDS 44% (CMHC), half of condo fees counted. Fees are our estimates unless you change them.
Sources
- Financial Consumer Agency of Canada — Reduce mortgage prepayment penalties (3 months' interest or the IRD; posted-rate method; prepayment privileges; porting) (effective October 15, 2025). Checked .
- Financial Consumer Agency of Canada — Breaking your mortgage contract (fees, cash-back clawback, blend-and-extend) (effective October 15, 2025). Checked .
- RBC Royal Bank — Understanding mortgage prepayment charges (posted rate less your rate reduction; present value). Checked .
- TD — TD explains: what is an IRD? (posted rate for a similar mortgage minus your discount) (effective August 19, 2020). Checked .
- Justice Laws — Bank Act, s. 418: 80% limit on uninsured residential loans (including refinances) (effective September 1, 2026). Checked .
- OSFI — Guideline B-20: Residential mortgage underwriting (HELOC limit 65% of value) (effective October 31, 2017). Checked .
- OSFI — Minimum qualifying rate for uninsured mortgages (contract + 2 points or 5.25%) (effective January 29, 2026). Checked .
- CMHC — Calculating GDS / TDS (39% / 44%). Checked .
- Bank of Canada — Target for the overnight rate (series V39079): 2.50% from October 29, 2026 (effective October 29, 2026). Checked .
- Bank of Canada — Posted conventional mortgage rate, 1-year (series V80691333) (effective October 28, 2026). Checked .
- Bank of Canada — Posted conventional mortgage rate, 3-year (series V80691334) (effective October 28, 2026). Checked .
- Bank of Canada — Posted conventional mortgage rate, 5-year (series V80691335) (effective October 28, 2026). Checked .
- Bank of Canada — Effective rate on new uninsured fixed mortgages, 5 years and over (series V122667786) (effective August 1, 2026). Checked .
- Bank of Canada — Effective rate on new uninsured fixed mortgages, 1 to <3 years (series V122667784) (effective August 1, 2026). Checked .
Why breaking a fixed mortgage rarely pays for a lower rate alone
The interest rate differential is built to hand the lender the interest it loses when you leave. Take $420,000 at 5.39% with a big bank, signed May 2024, 30 months left: the lower rate would save about $8,225 of interest before renewal (amortized, month by month), but the bank's posted-rate IRD is $9,765. Add fees and breaking loses; the cheapest route is blend and extend.
Breaking does pay when:
- Your penalty is three months' interest: variable-rate mortgages, or a fixed rate barely above today's.
- Your lender compares with its current rate for the time left, and that short-term rate is higher than today's 5-year rates (the example in the chart above).
- You lock a lower rate for longer than your term has left and expect renewal rates to be higher (set the renewal rate in the calculator).
- You need cash and a refinance beats a HELOC or blend-and-increase, or a new lender pays your costs.
The four routes
No penalty. Keep your rate to the end of the term, then renew or switch at the rates of the day. Your lender must send a renewal statement 21 days ahead.
Switch at renewal →Pay the penalty and fees for today's rate, a new term and, if you want, cash out up to 80% of value. You qualify again at 6.58% or more.
Price the penalty →Renew early with your lender, no prepayment penalty. Your old rate and today's rate are blended; FCAC says your lender must tell you how.
Estimate the blend →Leave a good mortgage alone and borrow the cash on a line of credit at prime + a margin, interest-only, up to 65% of value.
HELOC calculator →One question at a time
Next questions, answered on other MITEY sites
- How much equity your home's value unlocks, and appraisal vs assessment: Revalued.ca.
- Check you pass the qualifying rate on the new amount: MortgageStressTestCalculator.ca.
- Is your renewal or refinance quote a good rate? IsThisAGoodRate.ca; compare the big banks on BankMortgages.ca.
- Moving instead? See what you can afford on MortgageAffordabilityCalculator.ca.
- Model a line of credit in detail: HELOCCalculator.ca.
- Planning to be mortgage-free by retirement? RetirementPlanner.ca; 55 or older, compare a reverse mortgage on ReverseMortgaged.ca.
Frequently asked questions
Should I break my mortgage to refinance at a lower rate?
Only if the interest you save before your term would have ended beats the penalty and fees. On a closed fixed mortgage the interest rate differential is designed to cancel most of that saving, especially at big banks; on a variable mortgage the penalty is usually 3 months' interest, so breaking pays more often.
How much does it cost to break a mortgage in Canada?
Usually the higher of 3 months' interest or the IRD on a fixed mortgage, plus about $2,000 of appraisal, legal and discharge fees (our estimate). Our example big-bank mortgage would pay $9,765 in penalty.
What's the alternative to breaking my mortgage?
A blend-and-extend with your lender (no penalty), a HELOC behind your mortgage if you need cash, or waiting to refinance or switch at renewal, when there's no penalty at all.
How much can I take out when I refinance?
Up to 80% of your home's appraised value minus everything you owe, and you must qualify at the higher of the new rate + 2 points or 5.25%.
Primary sources
- Financial Consumer Agency of Canada — Reduce mortgage prepayment penalties (3 months' interest or the IRD; posted-rate method; prepayment privileges; porting) (effective October 15, 2025). Checked .
- Financial Consumer Agency of Canada — Breaking your mortgage contract (fees, cash-back clawback, blend-and-extend) (effective October 15, 2025). Checked .
- Financial Consumer Agency of Canada — Renewing your mortgage (21-day renewal statement; switching costs) (effective October 15, 2025). Checked .
- RBC Royal Bank — Understanding mortgage prepayment charges (posted rate less your rate reduction; present value). Checked .
- TD — TD explains: what is an IRD? (posted rate for a similar mortgage minus your discount) (effective August 19, 2020). Checked .
- Justice Laws — Bank Act, s. 418: 80% limit on uninsured residential loans (including refinances) (effective September 1, 2026). Checked .
- OSFI — Guideline B-20: Residential mortgage underwriting (HELOC limit 65% of value) (effective October 31, 2017). Checked .
- OSFI — Minimum qualifying rate for uninsured mortgages (contract + 2 points or 5.25%) (effective January 29, 2026). Checked .
- OSFI — Uninsured straight switches exempt from the minimum qualifying rate (no increase to the amortization or the loan amount) (effective November 21, 2024). Checked .
- Bank of Canada — Target for the overnight rate (series V39079): 2.50% from October 29, 2026 (effective October 29, 2026). Checked .
- Bank of Canada — Posted conventional mortgage rate, 1-year (series V80691333) (effective October 28, 2026). Checked .
- Bank of Canada — Posted conventional mortgage rate, 3-year (series V80691334) (effective October 28, 2026). Checked .
- Bank of Canada — Posted conventional mortgage rate, 5-year (series V80691335) (effective October 28, 2026). Checked .
- Bank of Canada — Effective rate on new uninsured fixed mortgages, 5 years and over (series V122667786) (effective August 1, 2026). Checked .
- Bank of Canada — Effective rate on new uninsured fixed mortgages, 1 to <3 years (series V122667784) (effective August 1, 2026). Checked .