Skip to content
Independent and free · penalties worked out from FCAC, RBC and TD methods · rates from the Bank of Canada · checked Nov 1, 2026Who runs this site
RefinanceCalculator.caBreak, blend or stay: the math, honestlyAsk Mitey
Methodology

Formulas, sources and changelog

How the refinance engine works, every rule and estimate it uses with its source and checked date, and a dated changelog. Rules last checked November 1, 2026. Published rates come from the Bank of Canada with their own dates.

Facts checked How we check facts

The model

Each route is simulated month by month over the same time frame (by default, the new term). Its cost is:

upfront cash + payments made + balance owed at the end − balance owed today − cash taken out

That is exactly the interest and fees the route costs, whether fees are paid in cash or added to the loan. The lowest cost leaves you with the most at the end. We don't credit interest you could earn by investing a payment difference.

Formulas

  • Three months' interest = amount prepaid × your rate ÷ 12 × 3.
  • IRD = (your rate − comparison rate) × amount prepaid × years left, not discounted to present value. Posted-rate method: comparison = posted rate for the time left − (posted rate when you signed − your rate). Current-rate method: comparison = the lender's current rate for the time left.
  • Penalty: closed fixed = the higher of the two; closed variable = three months' interest. A prepayment privilege comes off the balance first.
  • Posted rate for the time left: read on a straight line between the Bank of Canada's typical posted 1-, 3- and 5-year rates. Posted rate when you signed: the typical posted 5-year rate that month.
  • Blended rate = (your rate × months left + new rate × extra months) ÷ new term in months; with cash out, the new money is at the new rate.
  • Payments: level monthly payments, semi-annual compounding for fixed mortgages (Interest Act), monthly for variable mortgages; the payment is recomputed over the amortization left when a term renews.
  • HELOC: interest-only at prime + 0.5. Limits: total ≤ 80% of value; HELOC ≤ 65%.
  • Qualifying rate = max(new rate + 2, 5.25)%. Break-even month: first month the refinance's cost so far is at or below staying's. Rate you'd need: the new rate at which both cost the same, by bisection.

Every value we use

Rules and labelled estimates
ItemValueSource
Months of interest in the usual minimum prepayment penalty (FCAC)3Financial Consumer Agency of Canada
Closed variable mortgages: 3 months' interest, no IRD (RBC and TD; most lenders work the same way)trueRBC Royal Bank
Most a federally regulated lender can lend against a home without mortgage insurance, all mortgages combined (Bank Act s. 418)0.8Justice Laws
Most the revolving (HELOC) part can be, as a share of value (OSFI B-20)0.65OSFI
A straight switch can add up to this much to the balance for penalties and fees and stay exempt from the qualifying rate ($)$3,000OSFI
Qualifying-rate buffer over the contract rate (percentage points)2OSFI
Qualifying-rate floor (%)5.25OSFI
Housing costs as a share of gross income (CMHC's limit; many lenders use it for uninsured loans too)39CMHC
All debt payments as a share of gross income (CMHC's limit)44CMHC
Days before the term ends that a federally regulated lender must send your renewal statement21Financial Consumer Agency of Canada
Big-bank prime rate after the Bank of Canada raised its policy rate to 2.50% on October 29, 2026 (%)4.7Bank of Canada
HELOC rate over prime we use as a default (percentage points; offers vary)0.5Our estimate
Appraisal fee ($); quotes vary by city, property and appraiser$450Our estimate
Lawyer or notary and registration on a refinance or new HELOC ($); some lenders pay part or all$1,200Our estimate
Discharge or transfer fee your current lender charges when you leave ($)$350Our estimate
Administration fee for a blend-and-extend ($); many lenders charge less or nothing$250Our estimate

Changelog

  • 2026-11-01: Site rebuilt on the MITEY site kit around one decision: break your mortgage and refinance now, blend and extend, add a HELOC, or wait for renewal. Penalty methods checked against FCAC, RBC and TD; refinance limits against the Bank Act and OSFI B-20; the qualifying rate and the straight-switch exemption against OSFI. Posted and average rates come from the Bank of Canada with their own dates.
  • 2026-11-01: Removed the old calculator's assumptions: refinancing costs are no longer a flat 1.5% of the balance, the penalty is calculated instead of ignored, and savings are measured in interest and fees rather than in a lower payment from a longer amortization.
  • 2026-11-01: The ten city pages (Toronto to Kitchener) repeated the same text with a city name swapped in. They now point to the refinance costs guide, which covers what does differ by province.
  • 2026-10-29: Bank of Canada policy rate rose from 2.25% to 2.50%; big-bank prime moved to 4.70%.

All sources

Primary sources (checked dates shown)

  1. 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 .
  2. Financial Consumer Agency of Canada — Breaking your mortgage contract (fees, cash-back clawback, blend-and-extend) (effective October 15, 2025). Checked .
  3. Financial Consumer Agency of Canada — Renewing your mortgage (21-day renewal statement; switching costs) (effective October 15, 2025). Checked .
  4. Financial Consumer Agency of Canada — Borrowing money using home equity (80% / 65% limits, fees, risk to your home) (effective October 15, 2025). Checked .
  5. RBC Royal Bank — Understanding mortgage prepayment charges (posted rate less your rate reduction; present value). Checked .
  6. TD — TD explains: what is an IRD? (posted rate for a similar mortgage minus your discount) (effective August 19, 2020). Checked .
  7. Justice Laws — Bank Act, s. 418: 80% limit on uninsured residential loans (including refinances) (effective September 1, 2026). Checked .
  8. OSFI — Guideline B-20: Residential mortgage underwriting (HELOC limit 65% of value) (effective October 31, 2017). Checked .
  9. OSFI — Minimum qualifying rate for uninsured mortgages (contract + 2 points or 5.25%) (effective January 29, 2026). Checked .
  10. OSFI — Uninsured straight switches exempt from the minimum qualifying rate (effective November 21, 2024). Checked .
  11. Justice Laws — Eligible Mortgage Loan Regulations (SOR/2012-281), s. 6.1: insured refinance to add housing units (effective January 15, 2025). Checked .
  12. CMHC — Calculating GDS / TDS (39% / 44%). Checked .
  13. Justice Laws — Interest Act, s. 6 (mortgage rates stated yearly or half-yearly, not in advance). Checked .
  14. Bank of Canada — Target for the overnight rate (series V39079): 2.50% from October 29, 2026 (effective October 29, 2026). Checked .
  15. Bank of Canada — Posted conventional mortgage rate, 1-year (series V80691333) (effective October 28, 2026). Checked .
  16. Bank of Canada — Posted conventional mortgage rate, 3-year (series V80691334) (effective October 28, 2026). Checked .
  17. Bank of Canada — Posted conventional mortgage rate, 5-year (series V80691335) (effective October 28, 2026). Checked .
  18. Bank of Canada — Effective rate on new uninsured fixed mortgages, 5 years and over (series V122667786) (effective August 1, 2026). Checked .
  19. Bank of Canada — Effective rate on new uninsured fixed mortgages, 1 to <3 years (series V122667784) (effective August 1, 2026). Checked .
  20. Bank of Canada — Effective rate on outstanding credit card balances (series V122667812) (effective August 1, 2026). Checked .
  21. Bank of Canada — Effective rate on new unsecured personal lines of credit (series V122667807) (effective August 1, 2026). Checked .
  22. Bank of Canada — Effective rate on new personal loan plans (series V122667804) (effective August 1, 2026). Checked .
  23. Bank of Canada — Effective rate on new auto loans (personal loan plans) (series V122667805) (effective August 1, 2026). Checked .