Alberta Mortgage Refinance Guide

What refinancing does

Refinancing replaces your existing mortgage with a new one. Because you are breaking your current term, the decision is about the full picture — not just the rate on the new mortgage.

• Lower your interest rate or monthly payment
• Access home equity for renovations or other goals
• Consolidate higher-interest debt into your mortgage
• Change your term, amortization, or mortgage product

Penalties you need to weigh

The biggest cost of refinancing mid-term is usually the prepayment penalty from your current lender. Know which type applies before you run the numbers.

• Three months’ interest — common on variable-rate mortgages.
• Interest rate differential (IRD) — often on fixed-rate mortgages when rates have dropped.
• Legal, appraisal, and discharge fees on top of any penalty.
• Penalties are waived or reduced when you refinance at renewal.

Finding your break-even point

Monthly savings alone do not tell the story. A refinance that saves $150/month but costs $6,000 in penalties takes 40 months to break even. Use this framework:

• Estimate your one-time costs: penalty plus legal and appraisal fees.
• Calculate your monthly savings from the new rate or structure.
• Divide total costs by monthly savings to find your break-even in months.
• Decide whether you will stay in the home long enough to recover those costs.

When refinancing makes sense

• Rates have dropped meaningfully since you locked in.
• You need equity for renovations, investments, or debt payoff.
• Your financial situation has improved and you qualify for better terms.
• You are close to renewal anyway — penalties may be minimal or zero.

When to wait or renew instead

• The penalty exceeds several years of projected savings.
• You plan to sell or move within the break-even window.
• Consolidating debt without changing spending habits.
• You have not compared a straight renewal first.

Compare a renewal scenario instead →