§ Calculator · Housing
Refinance interest savings
What this is
Does refinancing your mortgage to a lower rate actually save you money?
Refinancing mid-term means breaking your current contract. Lenders charge an Interest Rate Differential (IRD) or 3-month interest penalty — whichever is larger. The new lower rate must save enough interest to cover that penalty + legal + appraisal.
- ·IRD penalty: roughly (old rate − today's comparable rate) × remaining balance × remaining months ÷ 12.
- ·Variable-rate mortgages: usually just 3 months interest as penalty.
- ·Breakeven: months for monthly savings to repay the up-front cost.
Old monthly
$2,848
New monthly
$2,497
Monthly savings
$351
Interest saved
$92,694
Cost to break
$6,000
Net benefit
$86,694
Breakeven in roughly 17 months (1.4 years).
Interest saved vs cost to break
Get a written quote from your lender for the actual IRD before refinancing — bank-calculated IRDs are often much larger than borrower estimates.
Disclaimer
Educational, not financial advice. Output is generated by an AI assistant using simplified assumptions. Tax rates, contribution limits, and benefit amounts change annually; confirm with a CFP, CPA, or the relevant Canadian regulator (CRA, FSRA, OSC, IIROC) before acting.