Refinance / Remortgage Calculator
Compare your current mortgage against a refinanced loan. See monthly savings, break-even month, and total savings over the new term.
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How to use this calculator
Calculate old and new monthly payments using the standard mortgage formula, then divide closing costs by the payment reduction to find how many months to recoup costs.
- 1
Enter your current remaining mortgage balance and interest rate.
- 2
Enter how many years are left on your current loan.
- 3
Enter the new interest rate and term being offered, plus any closing or refinancing costs.
- 4
Review the break-even month — if you plan to stay in the home longer than this, refinancing makes financial sense.
Frequently asked questions
What is a good rate reduction to justify refinancing?
The old rule of thumb was 1% reduction. More accurately, run the break-even analysis. On a large balance, even a 0.5% reduction can break even in under 2 years. On a small remaining balance, even 2% reduction might take years to recoup closing costs.
Should I reset to a 30-year term when refinancing?
It depends on your goal. Resetting to 30 years reduces the monthly payment most but you pay more total interest and extend your payoff date. Refinancing into a shorter term (e.g. 15 years) at a lower rate can dramatically reduce total interest while staying on track to be mortgage-free sooner.
What are typical closing costs for refinancing?
Refinancing closing costs typically run 2–5% of the loan amount. On a $280,000 balance, expect $5,600–$14,000. Some lenders offer "no-closing-cost" refinancing by wrapping costs into a slightly higher rate — this reduces upfront cost but increases long-term interest.
When is refinancing a bad idea?
When you plan to sell or move before the break-even month. When you're far into your current mortgage (later payments are mostly principal, not interest — so a refi restarts the interest-heavy early years). When prepayment penalties on the current loan exceed the savings.
Should you refinance your mortgage?
The break-even analysis
The core refinancing question is: how long until the monthly savings pay back the closing costs? Divide closing costs by monthly savings. If you plan to stay in the home beyond the break-even point, refinancing saves money. If you might sell before break-even, the upfront cost is a net loss. Always run this calculation before signing refinancing paperwork.
Cash-out refinancing vs rate-and-term
Rate-and-term refinancing replaces your loan at a new (usually lower) rate or different term — the goal is to save money. Cash-out refinancing replaces the loan with a larger one and gives you the difference in cash. Cash-out is useful for home improvements or debt payoff but increases your loan balance and mortgage payment. Use cash-out only if the purpose generates enough return to justify the higher debt.
Timing your refinance
Interest rates fluctuate with central bank policy and economic conditions. If you lock in when rates are high, watch for opportunities to refinance when rates fall. Conversely, if rates are low and expected to rise, locking in quickly is wise. Rate lock periods (typically 30–60 days) protect you during the application process.
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Results are estimates for informational purposes only and do not constitute professional financial, medical, legal, or technical advice. Read full disclaimer →