Free Ontario refinance calculator: see your break-even after the prepayment penalty, with a worked example. From TMC Greater Simcoe — Barrie, Orillia & Simcoe County.
A lower rate on its own doesn't mean you should refinance. In Ontario you pay a penalty to break your mortgage early, and that penalty can wipe out years of savings. The only number that matters is the break-even: how many months of lower payments it takes to earn back the penalty and fees. If you'll keep the home longer than that, refinancing usually wins.
On a variable-rate mortgage the penalty is typically three months of interest. On a fixed-rate mortgage it's the greater of three months' interest or the interest rate differential, which compares your rate with the lender's current posted rate and can run to many thousands of dollars. Get the written penalty quote from your lender before you decide.
A $400,000 balance at 5.5% with 20 years left, moved to 4.5%, drops the payment by about $225 a month. Against a $4,500 penalty you break even in roughly 20 months and finish close to $50,000 ahead. Shrink the rate gap to half a point and the same penalty takes about three and a half years to earn back.
If your term ends within four months, you usually don't need to refinance — at renewal there's no penalty, so compare renewal rates across 60+ lenders before signing your bank's letter. Refinancing mid-term only makes sense when the break-even is short or you need the equity now.
Craig runs this comparison with your real penalty quote for homeowners in Barrie, Orillia, Collingwood and across Simcoe County. The consultation is free.