A lower mortgage rate does not always produce a cheaper five-year deal. In an illustrative $400,000 mortgage with 20 years remaining, moving from 5% to 4.9% saves about $1,880 in interest over five years. If switching costs $2,000 upfront, the interest saving does not cover the fees.
Use the mortgage renewal calculator to compare your offers. Enter the same balance and remaining amortization for both scenarios, then add the fees you would actually pay.
Three lower-rate offers, with the same $2,000 fee
| New rate | Monthly payment | Five-year interest saved | Saving after $2,000 fees |
|---|---|---|---|
| 4.90% | $2,606.95 | $1,879.88 | −$120.12 |
| 4.75% | $2,574.78 | $4,696.34 | $2,696.34 |
| 4.50% | $2,521.62 | $9,381.66 | $7,381.66 |
The reference offer is 5%, with a $2,628.50 monthly payment. Every scenario starts at $400,000, keeps 20 years of amortization, uses a five-year term and compounds the nominal rate semi-annually. Payments, interest and balances are rounded to cents each month. Fees are paid upfront rather than added to the loan. These are modelled scenarios, not available offers.
Payment savings and borrowing-cost savings differ
Dividing $2,000 by the monthly payment reduction gives a cash-flow payback period. It is not the same as comparing the economic cost of the mortgages. Each payment contains both interest and principal; the lower-rate loan changes how much debt you repay.
At 4.9%, the payment falls by $21.55. Dividing the fee by that amount gives approximately 93 months—longer than the five-year term. The interest calculation answers a different question: over the 60 payments, does avoided interest cover the fee? In this example, it falls about $120 short.
For a clean comparison, keep the loan amount, payment frequency, term and amortization the same. If one offer extends amortization, a smaller payment can obscure a slower reduction in debt. Compare the 20- versus 25-year renewal example to see that effect separately.
Get the actual switching-cost quote
Ask for an itemized quote covering discharge, registration or assignment, appraisal and administration. Establish which costs the new lender pays, whether a promotion can be clawed back and whether other debts secured by a collateral charge must be moved or repaid. Switching before maturity can also involve a prepayment charge; ask your existing lender for its payout statement.
How to compare an offer in five minutes
Write down your balance on the switch date and the remaining amortization. Enter the current and proposed rates, then select the period over which you want to compare them. Add all net upfront costs. Read the interest-plus-fees difference and the two balances at term end. Save the comparison so you can return to the same assumptions when a new quote arrives.
The model does not assign a dollar value to portability, prepayment flexibility or a lender’s service. Those features can matter even when one offer has a slightly lower calculated cost. Variable rates also need separate scenarios because the future rate path is unknown.
Source: FCAC mortgage renewal and switching guidance. Rules and figures checked October 3, 2026.
Featured photograph: calculator and financial paperwork, by Jakub Żerdzicki / Unsplash, Unsplash License. Illustrative photograph; the charts shown are not the calculations in this article.