Liquidity Safety Check

The Refinance Break-Even.

Lower rates often come with high fees. Visualize exactly how long it takes to recover your closing costs before you sign.

Current Mortgage

Proposed Refinance

Appraisal, Legal, Discharge Fees, Penalties.

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Monthly Savings

$0.00

Break-Even Point

0 Months

Lifetime Savings

$0.00

The "Equity Trap" Analysis

* The crossing point represents where your accumulated savings finally exceed the upfront costs of refinancing.

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Analyzing...

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The Refinance "Liquidity Trap"

When interest rates drop, banks aggressively market refinancing. While a lower monthly payment is attractive, it often comes with a hidden cost: Extended Amortization and Capital Erosion.

For Canadian Seniors: If you are refinancing to consolidate debt or improve cash flow, you must calculate your "Break-Even Point."

  • The Friction Cost: Legal fees, appraisal costs, and mortgage discharge penalties can total $3,000 to $10,000.
  • The Break-Even Horizon: If your monthly savings are $100, but your closing costs were $5,000, it will take you 50 months (over 4 years) just to break even.
  • The Reset Danger: extending your mortgage back to 25 years at age 55 means you will carry debt until age 80. This directly impacts your ability to manage longevity risk.

Vector Analytic Insight:

Never roll closing costs into your mortgage balance without calculating the interest you will pay on those fees over 25 years. A $5,000 fee rolled into a 5% mortgage actually costs you over $8,700 over the life of the loan.