RefinanceCalculatorTools

Refinance Calculator

Find the monthly saving from refinancing, how long the closing costs take to recover, and what the new term does to total interest.

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Free · No sign-up · Runs in your browser

Refinancing is sold on the monthly saving and decided by two other numbers: how long the closing costs take to recover, and what resetting the term does to total interest. A refinance can lower the payment and increase what the loan costs, and frequently does.

This calculator reports all three. The break-even is the honest test - if you are unlikely to stay past it, the closing costs are a loss regardless of how attractive the new payment looks.

Your numbers

Results update as you type. Nothing is sent anywhere.

Result

Monthly saving

$287

Payments to break even

21 months

Break-even
1.8 years
Current payment
$2,039
New payment
$1,752
Annual saving
$3,443
Interest on the current loan
$385,047
Interest on the new loan
$288,638
Lifetime difference after costs
$90,408
Closing costs
$6,000

You recover the 6000 in closing costs after 21 payments.

How to use the refinance calculator

  1. Enter the current balance, rate and years remaining on the existing loan.
  2. Enter the new rate and the new term being offered.
  3. Enter the closing costs of the refinance.
  4. Compare the break-even months against how long you expect to stay.

What people use this for

  • Deciding whether a refinance offer is worth taking.
  • Comparing keeping the remaining term against resetting to a full one.
  • Working out how long you need to stay for the costs to be recovered.
  • Testing whether a no-cost refinance at a higher rate is better.

Worked examples

Every figure below is produced by running this calculator against the example inputs, so the numbers always match the tool.

A rate reduction on the same remaining term

$300,000 at 7% with 28 years remaining, refinanced to 5.5% over 28 years with $6,000 of costs.

Monthly saving
$287
Payments to break even
21 months
Lifetime difference after costs
$90,408

The same rate reduction on a fresh 30-year term

Identical figures with the term reset to 30 years, which lowers the payment further and adds months.

Monthly saving
$335
Interest on the new loan
$313,213
Lifetime difference after costs
$65,834

Resetting the term is the hidden cost

A borrower twenty-two years into a thirty-year mortgage who refinances into a new thirty-year term has just added eight years of payments. The monthly figure falls, and the total interest can rise even at a materially lower rate.

Refinancing into the remaining term instead - twenty-eight years in the example above rather than thirty - captures the rate saving without the extension. Most lenders will write a custom term if asked.

Break-even against expected tenure

Closing costs are recovered by the monthly saving. Divide one by the other and you have the number of payments before the refinance starts being worth anything.

A break-even of eighteen months is excellent. One of six years is a bet that nothing changes for six years, which for most households is not a safe assumption. Be conservative about how long you expect to stay.

Methodology and assumptions

What this calculator does, and what it deliberately does not do.

  • Closing costs are treated as paid at closing rather than financed, so the new payment is based on the existing balance.
  • Break-even divides closing costs by the monthly saving. Total interest figures assume each loan runs its full stated term.
  • Escrow, mortgage insurance changes and tax treatment are not modelled.
  • Results are estimates. Real quotes depend on credit, income, property, loan programme and lender pricing at the time of application.
  • Nothing you type is transmitted or stored - the calculation runs entirely inside your browser.

This calculator is provided for informational and educational purposes only. Results are estimates and may not reflect actual rates, fees, taxes, or market conditions.

This website is not a lender, a mortgage broker or a financial adviser. It does not originate loans, does not accept applications and does not forward your details to anyone.

Actual loan terms depend on credit history, income, the property, the loan programme and lender pricing at the time of application. Only a lender can tell you what you qualify for.

Frequently asked questions

What rate drop makes refinancing worthwhile?

There is no universal threshold - it depends on the balance, the costs and how long you stay. A large balance justifies a smaller rate drop because the saving is larger in dollars.

Should I roll the closing costs into the loan?

It preserves cash and increases the balance and the interest. This calculator assumes they are paid at closing; add them to the balance to model the alternative.

What is a no-cost refinance?

The lender covers the costs in exchange for a higher rate. It can be the better choice when the break-even on a paid-cost refinance is long.

Does refinancing restart the amortisation?

Yes. A new loan starts at the point where interest dominates each payment, which is part of why total interest can rise despite a lower rate.

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