In today’s ever-changing interest rate environment, many Canadian homeowners are wondering if it’s worth breaking their current mortgage early to secure a lower rate. At Spark Mortgages, we believe in educating and empowering our clients to make smart financial decisions that align with their goals.
Why Consider Breaking Your Mortgage?
When mortgage rates drop significantly below the rate you’re currently locked into, refinancing can look like an appealing option. A lower rate means lower monthly payments, potential long-term savings, and improved cash flow—especially in today’s high-cost living environment.
However, breaking a mortgage isn’t without its costs. Most lenders charge a prepayment penalty when you end your mortgage term early. This fee can vary depending on your lender and whether you have a variable or fixed-rate mortgage. Typically, the penalty is three months’ interest for variable-rate mortgages or the Interest Rate Differential (IRD) for fixed-rate mortgages—whichever is greater.
Is It Worth the Penalty?
The key question is whether the interest savings from the new, lower rate will outweigh the cost of the penalty. In many cases, homeowners who are early in their term or have high remaining balances may benefit the most from refinancing. For others, the savings may not be enough to justify the upfront cost.
That’s where a personalized mortgage review comes in. At Spark Mortgages, our expert brokers can help you calculate the break-even point, assess your current mortgage terms, and explore all available options—including porting your mortgage or blending rates.
The Bigger Picture
Refinancing isn’t just about chasing lower rates—it can also be a strategic move to consolidate debt, access home equity, or switch to a more flexible mortgage product. Our team takes a holistic view of your financial situation to ensure you’re making the best decision for your future.
Let Spark Mortgages Guide You
Breaking your mortgage can be a smart financial move—but only when done with the right guidance. If you’re curious about whether it’s the right time to refinance, let’s connect. At Spark Mortgages, we’re committed to finding solutions that help you save money, build wealth, and achieve your homeownership goals with confidence.
