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We have 4 years left on our 5 year term of 5.1%….there is still 208k left on our mortgage, the table looks like we should have it paid off in 18 years.

With rates the way they are, how do I figure out what point it makes sense to pay the penalty and re-negotiate my mortgage rate early of the renewal?

This is a Canadian question, and RBC is the lender if that helps.

Given that you have 4 more years at the current, low interest rate and would then have only 14 years left on the mortgage, the best answer likely is to NOT consider refinancing at all during the fixed rate period. Even if you were able to get a lower interest rate, the payment of penalties to refinance along with additional closing costs would require a significant amount of time to recover these expenses at the lower rate. A much better solution would be to apply the closing cost money and penalty money, along with any other funds you may find available, to make extra principle reduction payments. Even a modest extra amount of 5% to 10 % of the total monthly payment paid each month can reduce your eventual payoff considerably. With not much effort and consistently paying a little more toward principle each month, you could have about 10 years or even less left on this loan when the fixed rate ends. If the rate resets to a higher level, the amount remaining will be significantly smaller, thus the total remaining interest paid would not be a major concern. And if you did decide you wanted to refinance at that time, your options are much better as you would have lots of equity and the term would be very short, making the loan attractive to many lenders.