In This Article The two kinds of refinance cost Transaction costs, line by line Why provinces differ The prepayment penalty: where the real money is Worked example: three months' interest Worked example: IRD at a lender using posted rates Same file at a lender using contract rates Hidden costs people forget Six ways to lower the cost The break-even test What to have ready for an accurate quote Frequently asked questions Can I add refinance costs to my mortgage? Do I have to pass the stress test again when I refinance? Is refinancing cheaper through a broker? How much is the penalty to break a fixed mortgage? Table of Contents Refinancing a mortgage in Canada usually costs $1,000 to $2,500 in fixed fees, plus a prepayment penalty if you break your term early. The fixed fees rarely decide anything. The penalty does — it can be a few thousand dollars on a variable mortgage or well over $15,000 on a fixed mortgage at a big bank. This guide walks through every cost in CAD, shows the penalty math with real numbers, and gives you a simple test to decide whether the refinance pays for itself. The two kinds of refinance cost Every refinance has two cost buckets: Transaction costs — legal, appraisal, discharge, title insurance and registration. These are similar no matter which lender you pick, and some lenders cover part of them. The break cost — the prepayment penalty your current lender charges to end your mortgage before the term is up. This is zero at renewal and can be very large mid-term. Get both numbers in writing before you commit to anything. Transaction costs, line by line Cost Typical range (CAD) Who sets it Can it be avoided? Real estate lawyer / notary (Quebec) $800–$1,500 Your lawyer Some lenders offer "no-cost" refinance legal packages Appraisal $300–$600 Appraiser hired via the lender Sometimes waived on lower loan-to-value files Discharge / admin fee $0–$400 Your current lender No, but it's small Title insurance $150–$400 Title insurer Usually required by the new lender Registration of the new mortgage Varies by province Provincial land registry No Collateral charge re-registration Included in legal, but adds work Lawyer Only matters if you're leaving a collateral-charge lender A standard refinance with a lender that pays legal fees can land closer to $500–$1,000 all-in. A complex file — private debt being paid out, a collateral charge being discharged, multiple titles — can push legal fees above $1,500. Why provinces differ Registration and legal work vary. Ontario registers electronically through the land registry system, British Columbia through the Land Title Office, and Quebec uses a notary rather than a lawyer. Alberta charges registration fees that scale with the mortgage amount. Ask your lawyer or notary for an all-in quote that lists registration separately so you can compare apples to apples. The prepayment penalty: where the real money is If you refinance before your term ends, your lender charges a penalty: Unlock Your Home Equity Refinancing could save you thousands. See how much equity you can access or how much you could save on your monthly payments. Calculate Savings Variable-rate mortgages: almost always three months' interest. Fixed-rate mortgages: the greater of three months' interest or the interest rate differential (IRD). Worked example: three months' interest Illustrative. Balance $500,000 at 5.00%. Annual interest is $25,000, so three months is about $6,250. Worked example: IRD at a lender using posted rates Illustrative. Same $500,000 balance, contract rate 5.00%, 24 months left. The lender's posted 2-year rate today is 5.24%, and you originally got a 1.50% discount off the posted 5-year rate. Many big banks subtract that original discount from today's comparison rate: 5.24% − 1.50% = 3.74%. The differential is 5.00% − 3.74% = 1.26%. IRD ≈ $500,000 × 1.26% × 2 years = about $12,600. Same file at a lender using contract rates A lender that compares against its actual current 2-year rate (say 4.40%) gets a differential of 0.60%: $500,000 × 0.60% × 2 = $6,000 — and since three months' interest is $6,250, you'd pay $6,250. Same mortgage, roughly half the penalty. That's why the penalty method matters as much as the rate when you choose your next lender. Your exact figure must come from your lender in writing. Our mortgage penalty calculator gives you a ballpark first. Hidden costs people forget Lost cash-back clawback. If your current mortgage came with cash back, breaking it early may trigger repayment of part of it. Extra interest from a longer amortization. Resetting to 30 years lowers the payment but can add tens of thousands in total interest. Higher rate on the new money. A refinance rate is often a bit higher than an insured purchase rate because refinances can't be default-insured. Interest on consolidated debt. Rolling a car loan into a 25-year mortgage can cost more in total even at a lower rate, unless you pay it down faster. Six ways to lower the cost Refinance at renewal — the penalty disappears completely. Start shopping 120 days before your maturity date. Blend and extend with your current lender to avoid the penalty, at a weighted blended rate. Ask for the math in writing. Use your prepayment privilege first. Many lenders calculate the penalty on the balance after you make your annual lump-sum prepayment. Ask the new lender to cover legal and appraisal. Lender-paid packages are common on standard refinances. Roll costs into the new mortgage if you stay at or under 80% of the home's value. Compare penalty methods, not just rates, so your next break is cheaper. The break-even test Add every cost including the penalty, then divide by the monthly savings. That's how many months until the refinance pays for itself. Scenario (illustrative) Total cost Monthly saving Break-even Refinance at renewal, rate drop only $1,200 $150 8 months Variable, mid-term, consolidating debt $7,450 $620 12 months Fixed at a posted-rate lender, rate drop only $13,800 $210 66 months If you'll keep the mortgage longer than the break-even, the numbers work. If break-even is past your term, it usually doesn't. Run your own figures in the refinance calculator. What to have ready for an accurate quote Your latest mortgage statement (balance, rate, maturity date) A written penalty quote from your current lender Your most recent property tax bill Recent pay stubs or a job letter, plus your last two Notices of Assessment if self-employed Balances on any debts you want to consolidate Ready to Get Started? Contact us today for personalized mortgage advice and competitive rates. Get Pre-Approved Call (416) 822-7357 Frequently Asked Questions Can I add refinance costs to my mortgage? Yes, as long as the new total stays at or under 80% of your home's appraised value, which is the maximum for any refinance in Canada. Do I have to pass the stress test again when I refinance? Yes. You qualify at the greater of 5.25% or your contract rate plus 2%, even if you are staying with the same lender and adding money. Is refinancing cheaper through a broker? On standard files the broker is usually paid by the lender, and comparing 50+ lenders often finds a lower rate, a fairer penalty method or lender-paid legal fees. How much is the penalty to break a fixed mortgage? It is the greater of three months' interest or the interest rate differential. At lenders that use posted rates, the IRD can be two to three times higher than at lenders that use contract rates. For the full process from start to funding, see our mortgage refinance guide. Want the real numbers on your file? A licensed broker compares 50+ lenders for you, fast. Get My Best Rate
