Refinance Calculator
Find out whether refinancing your mortgage actually pays off — and how many months until the lower payment covers the closing costs.
Break-even point
17.7 months
- New monthly payment
- £1,461.48
- Monthly savings
- £226.54
- Lifetime savings (after costs)
- £63,962.84
Break-even is how long the lower monthly payment takes to recover the closing costs. Lifetime savings compares total payments over the full new term against what you would pay finishing the existing loan, less the closing costs. A longer new term can lower the monthly payment but increase total interest — check both numbers before deciding.
How to use this calculator
Enter your current loan balance, the interest rate and years remaining on your existing mortgage, then the new rate and term you have been offered, plus the total closing or arrangement costs. The calculator returns your break-even point in months, the new monthly payment, monthly savings, and total lifetime savings net of costs.
How the calculation works
Both monthly payments use the standard amortisation formula: P = L × r / (1 − (1+r)^−n), where L is the loan balance, r is the monthly rate (annual ÷ 12) and n is the total number of payments. Break-even months = closing costs ÷ monthly savings. Lifetime savings compares total payments over the new term against finishing the current loan, less the closing costs.
Worked example
A $250,000 balance at 6.5% with 25 years remaining vs a 5.0% refinance over 25 years with $4,000 in closing costs: old payment ≈ $1,688, new payment ≈ $1,461, monthly savings ≈ $227, break-even ≈ 17.6 months, lifetime savings ≈ $64,000.
Frequently asked questions
When does refinancing make financial sense?
Refinancing usually makes sense when the break-even period is comfortably shorter than how long you plan to keep the property and the new rate is at least 0.5–1.0 percentage points below your current rate. If you may move or sell before break-even, the closing costs will outweigh the savings.
Should I include the closing costs in the new loan?
This calculator assumes you pay closing costs separately rather than rolling them into the new principal. Rolling them in raises the balance, the new monthly payment, and the total interest you pay — so the break-even calculation needs that adjustment. As a quick check, add the costs to the current balance before entering it.
What is a no-closing-cost refinance?
A "no-closing-cost" refinance trades upfront fees for a slightly higher interest rate, so the lender recovers the costs over time. The break-even point becomes effectively immediate, but the lifetime interest is higher. Compare both options with the calculator by entering each rate and the matching closing cost figure.
Does a longer new term mean lower lifetime cost?
Not usually. Extending the term lowers your monthly payment but stretches interest over more years, so total interest paid often rises. The calculator surfaces lifetime savings explicitly so you can compare a 15-, 20- and 30-year refinance side by side.
Is this calculator country-specific?
The maths is universal — amortisation works the same whether you call it refinancing (US) or remortgaging (UK). Currency labels are illustrative; enter your loan in your own currency and the relative figures hold. Local fees, taxes and rate structures vary, so cross-check the closing costs with your lender or broker.
What about cash-out refinancing?
A cash-out refinance increases your loan balance to release equity. To model it, add the cash-out amount to your current balance before entering it. The new monthly payment, break-even and lifetime cost will reflect the larger loan.