How this calculator works
Both scenarios use the same remaining balance and amortization. Canada mode converts a nominal rate compounded semi-annually to monthly payments; US mode compounds monthly. Costs are paid upfront, rather than added to the new loan. Rates stay fixed, savings are not discounted and tax effects are excluded.
Formula
i = (1 + r/2)^(1/6) - 1 in Canada, or r/12 in US mode. A = P × i / (1 - (1 + i)^(-N)), or P/N at 0%. S = old payment - new payment. Recovery months = costs/S when S > 0; net saving = N × S - costs.
Worked example
For $300,000 over 240 months in Canada mode, moving from 6% to 4% lowers payments from $2,136.57 to $1,812.74. The monthly saving is $323.83; $5,000 of costs are recovered in 15.44 months. Net saving is $72,718.22.
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Frequently asked questions
What if the new payment is no lower?
There is no positive monthly saving to recover costs, so no numeric recovery period is shown. Net saving still includes your upfront costs.
Can I change the amortization when refinancing?
This comparison holds it constant. Extending repayment can lower payments while increasing interest, so it needs a separate comparison.
Which costs belong in the estimate?
Include applicable prepayment penalties, discharge fees, legal costs, appraisal fees and other upfront refinancing charges from your quotes. A recovery period beyond the remaining months falls outside this horizon.