Is Refinancing Your Rental Worth It?

Avatar of u/calculators

Evaluate refinancing your investment property loan using Eva’s missed investment value method, factoring in penalties, legal fees and fully deductible interest.

Last update Dec 2024
  • Scenario 1: Cost of Refinancing Mortgage
  • Scenario 2: Cost of Keeping Current Mortg.
  • Which One Is Higher (%)

Compare refinancing vs. keeping your investment property mortgage using the missed investment value of payments. This approach factors in fully tax-deductible interest for Canadian investment property owners.

# Years from Now
Try your numbers:

The remaining balance on your current investment property mortgage.

A =

The interest rate on your existing mortgage. Investment property rates are typically higher.

B =

The number of years left on your current mortgage term.

C =

The interest rate you are being offered for the new mortgage. Investment property rates are typically higher.

D =

The length of the new mortgage term, typically reset to 30 years for Canadian investment properties.

E =

The penalty cost for breaking your current mortgage, if applicable.

F =

The estimated legal and administrative costs for refinancing.

G =

Any additional costs associated with refinancing.

H =

Your marginal income tax rate. Used to calculate the tax-deductible impact of mortgage interest payments.

I =
Confirm Delete

Are you sure you want to delete ": "?

Add Input
  • Amount
    Any single amount ($).
  • Cash Flow
    Rent, insurance premium, salary, ...
  • Current Asset
    Real estate, commodity, bonds, ...
  • Installment Loan
    Mortgage, car loan, ...
  • Percentage
    Any percentage value (%).
  • Years / Months
    Any time horizon.
  • Age
    Show "Age" instead of "# Years from Now."
  • Retirement Age (requires Age)
    Enable "Investment Return After Retirement."

Time Value Assumptions

Heads Up!

If you're using Cost Basis (cb) for calculating capital gains:

Please be aware that very few countries currently use inflation-indexed cost basis. Double-check your local tax rules before publishing.

Scroll up to view updated chart.

Not what you want?

How is Cash Value calculated?

This scenario evaluates the total cost of refinancing your investment property mortgage, combining the missed investment value of payments and the benefits of a potentially lower rate. It accounts for penalties, legal fees, and the full tax-deductibility of interest to determine whether refinancing is financially advantageous for Canadian property owners.

Decisions / Expectations

(Expressions are evaluated at Year 0 only.)

J =
0

Calculations

(Expressions are evaluated at every year.)

K̃ =
L̃ =
Confirm Delete

Are you sure you want to delete ": "?

Add Decision or Expectation
  • Buy Asset
    Buy an asset growing at its own rate.
  • Take Installment Loan
    Take a mortgage, loan, etc.
  • Invest
    Receive/Spend a lump sum.
  • Expect to Invest
    Expect to receive/spend a lump sum.
  • Expect Monthly Cash Flow
    Expect to receive/spend cash monthly.
  • Expect Yearly Cash Flow
    Expect to receive/spend cash yearly.
  • Define Variable (Numerical)
    Calculate an intermediate value.
Add Intermediate Calculation
  • Define Variable (Numerical)
    Calculate an intermediate value.
  • Define Variable (Cash Flow)
    Calculate a combined cash flow.