Refinance / Remortgage Calculator
Compare your current mortgage against a refinanced loan. See monthly savings, break-even month, and total savings over the new term.
Did this tool work for you?
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
How does the tool compare the old and new loan?
It computes two level payments on the same current balance: the old one at the current rate over the remaining term, the new one at the new rate over the new term. Each uses payment = P × r ÷ (1 − (1 + r)^−n) with monthly payments at the end of each month. Monthly savings are old payment minus new payment.
How is the break-even month calculated?
This tool uses break-even = closing costs ÷ monthly savings, rounded up to a whole month. For the defaults ($280,000, 7.5% over 25 years to 6% over 30 years, $5,000 costs) the savings are $390.43 and the break-even is 13 months. If monthly savings are zero or negative it shows Never.
What is “Net Lifetime Saving”?
It equals the old payment × remaining months, minus the new payment × new term months, minus the closing costs. It can be negative, shown with a minus sign. It does not ignore the term difference: stretching from 25 to 30 years or raising the rate can leave a lower payment but a worse lifetime figure.
Can a lower payment still cost more overall?
Yes. At an 8% new rate over 30 years, the default loan saves only $14.63 a month, the break-even is 342 months, but the net lifetime figure is −$123,882.10 because the new loan runs five years longer. A lower payment is not the same as lower total cost.
Are closing costs added to the new loan?
No. They are assumed to be paid in cash, and the new loan equals the current balance. Rolling costs into the balance, cash-out refinancing, points and rate-lock fees would change the numbers and are not modelled.
How are zero values handled?
A 0% rate on either loan is used as 0. Zero closing costs give a break-even of 0 months when the payment falls. A balance or term of 0 gives n/a. When both loans have the same rate and term, the break-even shows Never and the lifetime figure is the negative of the costs.
Does the tool say whether I should refinance?
No. It reports figures only and gives no recommendation. Taxes, how long you will keep the loan, escrow changes, early-repayment charges on the old loan and the time value of money are not included, and your own circumstances and the lender’s terms decide.
Are the rates in the examples current?
No. They are inputs only. Real rates, fees and rules change, and your lender’s disclosure governs the actual terms.
Refinancing arithmetic: payment drop, break-even and lifetime cost
Two payments on the same balance
The calculator prices your existing loan and the replacement on the same balance. The old payment uses the current rate and remaining term, and the new payment uses the new rate and new term. Their difference is the monthly saving, and closing costs divided by that saving give the break-even month. With the defaults, the old payment is $2,069.18, the new one $1,678.74, the saving $390.43 and the break-even 13 months.
Worked example: same term versus a longer one
A $200,000 balance moving from 6.5% to 5.5% over 20 years with $4,000 of costs saves $115.37 a month, from $1,491.15 to $1,375.77, and breaks even in 35 months. Over the whole term that is a net saving of $23,689.20. In the default case the term stretches to 30 years, so the payment falls by $390.43 but the lifetime figure is $11,405.66. Keeping 25 years instead (second row of the table below) saves less per month, $265.13, yet leaves a lifetime figure of $74,539.41. The lifetime number counts every payment on both loans, which is why term length matters so much.
When a smaller payment does not mean a smaller cost
The rows of the next table all use the default $280,000 balance at 7.5% with 25 years remaining and $5,000 of costs. Only the new rate and term change, which shows how payment, break-even and lifetime cost can point in different directions.
| Replacement loan | New payment | Monthly saving | Break-even | Net lifetime saving |
|---|---|---|---|---|
| 6% over 30 years | $1,678.74 | $390.43 | 13 months | $11,405.66 |
| 6% over 25 years | $1,804.04 | $265.13 | 19 months | $74,539.41 |
| 8% over 30 years | $2,054.54 | $14.63 | 342 months | −$123,882.10 |
Zero and never cases
With zero closing costs and a lower payment, the break-even is 0 months. If the new payment is not lower, the break-even reads Never, and with both rates at 0% on a 25-year replacement the payment is the same $933.33 and the lifetime figure is the negative of the $1,000 costs. A balance or term of 0 returns n/a.
What the comparison leaves out
It excludes taxes, escrow, early-repayment charges, financed costs, cash-out amounts, the time value of money and how long you will actually hold the loan. No recommendation is made. Real rates, fees and rules change, so the lender’s disclosure and your own circumstances decide. The summary line states the break-even in months and nothing more.
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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 →