Refinance Calculator

What refinancing actually decides

Refinancing replaces your existing loan with a new one, usually to secure a lower rate. The monthly saving is easy to see and easy to oversell, because it arrives only after you have paid the closing costs. The real question is not whether the new payment is lower but how long you must keep the loan for the saving to exceed what the switch cost you — the break-even point.

The formula behind it

Both payments come from the standard amortization formula applied to your balance: the old one over the years remaining, the new one over the new term. The monthly saving is the difference, and the break-even is closing costs ÷ monthly saving. Costs of 4,000 against a saving of 200 a month break even at 20 months; sell or refinance again before then and you have lost money.

How to use this calculator

Enter your current balance, your current rate and years remaining, then the new rate, the new term and the closing costs. The result shows both monthly payments, the monthly saving and the break-even point in months.

The trap in the monthly saving

Much of an advertised saving often comes from resetting the term rather than from the lower rate. Refinancing 18 remaining years into a fresh 30-year loan cuts the payment substantially while adding twelve years of interest — you can end up paying far more overall despite a better rate. Compare total remaining interest, not just the monthly figure, and where possible refinance into a term no longer than what you had left.