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Mortgage refinance calculator

Enter your current balance, rate, and years remaining, then the new rate, new term, and closing costs. The calculator shows the new payment, your monthly savings, and the break-even point as you type.

Use it to see whether refinancing lowers your monthly payment and how many months it takes for the saving to cover the closing costs.

USD
%
yr
%
yr
USD

New monthly payment

$1,419.47

Current
New
Monthly savings
$347.48
Break-even
12 mo
Current payment
$1,766.95

The result updates as you type. The bars compare your current payment with the new one, and the break-even shows when the saving repays the closing costs.

How does it work?

Both payments use the standard amortizing formula on the same balance. Break-even is shown only when the new payment is lower. A longer new term can lower the payment yet raise the total interest.

Refinance break-even formula

Break-even=closing costscurrent payment−new payment\text{Break-even} = \frac{\text{closing costs}}{\text{current payment} - \text{new payment}}
current payment
Monthly payment on the current balance, rate, and remaining term.
new payment
Monthly payment on the same balance at the new rate and term.
closing costs
One-off cost of taking out the new loan.

Refinancing 250,000 from 7% (25 yrs left) to 5.5% over 30 yrs cuts the payment from about 1,766.95 to 1,419.47, saving 347.48 a month; 4,000 in closing costs break even in about 12 months.

Method & sources

Both payments are principal and interest only, on the same current balance. The current payment uses the current rate over the years remaining; the new payment uses the new rate over the new term. Break-even is the closing costs divided by the monthly saving, shown only when the new payment is lower.

Sources

Where this method comes from — use these references to understand the formula, assumptions, and limits.

How we calculate

  • Both payments are principal and interest only, on the same current balance.
  • The current payment uses the current rate over the years remaining; the new payment uses the new rate over the new term.
  • Break-even is the closing costs divided by the monthly saving, shown only when the new payment is lower.
  • Rates are fixed for each term and you supply them yourself.
  • Tax, insurance, points beyond the closing-cost figure, and cash-out amounts are not modelled.

Rounding

Payments are rounded to two decimals and the break-even is rounded up to a whole month for display. The calculation uses full precision.

What this calculator does

Refinancing replaces your current mortgage with a new one, usually to get a lower rate or a different term. This calculator works out the payment on your current balance both ways — at your current rate over the years left, and at the new rate over the new term — then shows the monthly difference and how long the saving takes to repay the closing costs.

How to use it

  1. Enter your current balance, rate, and years remaining.
  2. Enter the new rate and the new term in years.
  3. Enter the closing costs of the new loan.
  4. Read the new payment, monthly savings, and break-even below.

A worked example

Refinancing a 250,000 balance from 7% with 25 years left to 5.5% over 30 years cuts the payment from about 1,766.95 to 1,419.47 — a saving of about 347.48 a month. With 4,000 in closing costs, you break even in about 12 months.

Watch the term, not just the rate

A longer new term lowers the monthly payment but can increase the total interest you pay, because you borrow for longer. A lower payment is not always cheaper overall. Compare the term you have left with the new term before deciding.

Common mistakes

  • Comparing a fresh 30-year term against a loan with far fewer years left without noticing the extra interest.
  • Leaving closing costs out. They determine how long the saving takes to pay for itself.
  • Forgetting that this is principal and interest only — tax and insurance are not included.

When it's useful

Deciding whether a rate offer is worth the closing costs, comparing two refinance quotes, or checking how long you'd need to stay before a refinance pays off.

FAQ

How is break-even calculated?
It divides the closing costs by the monthly saving. If you save 347.48 a month and pay 4,000 in costs, you break even in about 12 months. It only appears when the new payment is lower.
Why might the new payment be higher?
If the new rate or term doesn't reduce the payment, the monthly saving is zero or negative and no break-even exists. The calculator shows there is no saving in that case.
Does a lower payment always save money?
No. Stretching the balance over a longer term lowers the monthly payment but can raise the total interest. Compare the remaining term with the new term.
Does this include tax and insurance?
No. Both payments are principal and interest only. Property tax and insurance are the same regardless of the loan, so they don't affect the saving.
Which currency does it use?
The currency follows the site language. The comparison math is identical in every market.
Can I share a calculation?
Yes. Use Share to copy a link that reopens the calculator with the same balance, rates, terms, and closing costs.

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