Refinance Interest Savings

How much interest can you save if you refinance your mortgage? This calculator helps you find out! Enter the specifics about your current mortgage, along with new loan amortization, rate and closing costs. We will then determine how much interest refinancing can save you.

To help you see how much you can afford, there are two simple rules that lenders use to determine how much of a mortgage you qualify for. These rules are governed by Canada Mortgage and Housing Corporation (CMHC) which is Canada's national housing agency and Canada's premier provider of mortgage loan insurance, mortgage-backed securities, housing policy and programs, and housing research. Visit them at http://www.cmhc-schl.gc.ca

The first rule is that your monthly housing costs should not exceed 32% of your gross monthly household income (GDS). Housing costs include monthly mortgage payments, taxes and heating expenses. If applicable, this sum should also include half of monthly condominium fees. Secondly, your entire monthly debt load should not be any more than 40% of your gross monthly income (TDS). This includes housing costs, and other debts such as car payments, personal loans, and credit card payments.

Before you begin using our calculator below, please visit CMHC's GDS and TDS calculators to see if you are in line with their qualification limits: http://www.cmhc-schl.gc.ca/en/co/buho/hostst/hostst_002.cfm#CP_JUMP_28119

Definitions

Original mortgage balance Total amount for your original mortgage. Original rate Annual percentage rate of your original mortgage. Original amortization The total number of years for your original mortgage. Number of payments made The total number of payments you have made on your original mortgage. New rate Annual percentage rate of your new mortgage. New amortization The total number of years for your new mortgage. New mortgage balance Total amount for your new refinanced mortgage. This amount is equal to your current balance on your original mortgage. All closing costs and prepayment penalties are assumed to be paid at the time of closing. These additional costs are not added to your new mortgage balance. Closing costs Total fees and other costs associated with the new mortgage and paid at the time of closing. This calculator assumes that all closing costs are paid with proceeds other than the new mortgage (closing costs are not added to the total for your new mortgage amount). Prepayment penalties Some mortgages require you to pay a penalty if the mortgage is paid off early. If you current mortgage has a penalty for prepayment, enter that amount here. Your prepayment penalties are assumed to be an additional cost that is paid at the time of closing. Breakeven point The breakeven point occurs when your interest savings equals your additional closing costs and prepayment penalties. If you have no closing costs or prepayment penalties, there is no breakeven point.