What Are Refinance Penalties? When you refinance your mortgage before your current term ends, your lender may charge a prepayment penalty  to recover some of the interest they would have earned. View from The Guardian Tower in Calgary, showing how smart refinance timing protects your home’s value. These penalties are common in Alberta cities like Calgary, Edmonton, Red Deer, and Lethbridge , especially when homeowners refinance early to access equity or secure better rates. I