Mortgage Refinance Calculator

Both loans are amortised. Monthly saving = current payment − new payment. Break-even = upfront closing costs ÷ monthly saving. Lifetime-interest difference compares total interest on each — a longer new term can raise it even at a lower rate.

Three numbers decide a refinance

Refinancing replaces your current loan with a new one — ideally at a lower rate — but it is not free, so a lower payment alone does not mean it is worth it. Three figures tell the real story. The monthly saving is the drop in your payment. The break-even is how many months of that saving it takes to recoup the closing costs. And the lifetime-interest difference is whether, over the whole loan, you end up paying more or less interest than if you had left things alone. This calculator works out all three from your current balance, rate and remaining term against the new rate and term.

The rule of thumb is simple: refinancing pays off if you keep the loan well past the break-even point. If you might sell or move before then, the closing costs outweigh the savings. That is why the calculator asks how long you plan to stay, and tells you plainly whether you clear break-even in time.

Worked example — $300,000 owed at 7.5% with 25 years left, refinanced to 6.0% over 25 years, 3% closing costs: The payment falls about $284 a month, and the $9,000 of costs are recouped in roughly 2.6 years. Stay 7 years and you are about $14,900 ahead — and because the term matches, you also save around $85,000 of interest over the life of the loan.

The term-reset trap

Here is the catch the headline payment hides. When you refinance, you usually start a fresh term — and if the new term is longer than what was left on the old loan, you can lower the monthly payment while raising the total interest you pay, even at a lower rate. Stretching 22 remaining years back out to 30 is the classic example: the payment drops nicely, but you are now paying interest for eight extra years. The calculator shows the total interest on each loan side by side and flags when the refinance actually costs more over its life.

The fix is to compare like-for-like: set the new term to roughly the years you have left, or make extra payments on the new loan to keep the payoff date. A lower rate over the same term is an unambiguous win; a lower payment over a longer term is a cash-flow choice that can be expensive if you let it ride to the end.

Cash-out, points and rolling in the costs

A few options change the maths. Cash-out refinancing borrows above the payoff and hands you the difference — useful, but it enlarges the loan, the payment and the total interest, so the saving comparison is no longer pure. Points are an upfront fee to buy a lower rate; they raise the closing costs but can be worth it if you stay long enough. And you can usually choose to pay the closing costs in cash or roll them into the new loan: rolling them in means no money out of pocket and an immediate "break-even", but you then pay interest on those costs for years, which the lifetime-interest figure captures.

The side-by-side table tracks both balances year by year and the cumulative savings net of costs, so you can see exactly when the refinance moves into the black — and the chart marks that break-even crossover against the flat line of your closing costs.