Refinance Calculator
This refinance calculator compares your current loan against a new rate and term, showing the monthly payment savings, how long it takes to recover the closing costs, and the true lifetime saving once those costs are accounted for. Enter your current loan details and the new offer to see whether refinancing is actually worth it — not just whether the new rate looks lower.
Your outstanding balance today — the amount you'd be refinancing, not the original loan amount.
The rate on your existing loan.
How many years are left on your existing loan, not the original term.
The rate on the refinance offer you're considering.
The repayment term on the new loan — refinancing into a longer term lowers the payment but can add years of interest.
Fees to refinance — appraisal, origination, legal and title fees typically run 2–5% of the loan amount.
Monthly payment savings
$183
How much lower your monthly payment is on the new loan — e.g. $183/month refinancing $300,000 from 6.5% to 5.5%.
How long it takes the monthly savings to recover the closing costs — refinancing only pays off if you keep the loan past this point.
What you'd pay each month under the new loan, for direct comparison against your current payment.
Total interest saved over the new loan's full term, minus the upfront closing costs — the real bottom line.
How to use this refinance calculator
- 1Current loan balance and rate: use your outstanding balance today, not the original loan amount, and your current rate exactly as it appears on your statement.
- 2Years remaining: how much time is actually left on your current loan — refinancing resets the clock, so this matters for a fair comparison.
- 3New rate and term: the specific offer you're evaluating, including any term change (refinancing into a fresh 30-year term lowers the payment but can add years of total interest).
- 4Closing costs: get the real figure from your refinance quote — appraisal, origination and title fees typically run 2–5% of the loan amount and materially affect whether refinancing pays off.
Understanding your results
Monthly payment savings is the immediate cash-flow benefit — money back in your pocket every month. Break-even period tells you the minimum time you need to keep the new loan before refinancing was worth the upfront cost; if you plan to move or refinance again before this point, the deal likely isn't worth it. New monthly payment lets you sanity-check affordability directly. Lifetime savings is the real bottom line: total interest saved over the new loan's term, after subtracting closing costs — a positive number means refinancing wins overall, not just month to month.
The formula
Break-even = Closing Costs ÷ Monthly SavingsMonthly savings is simply the difference between your current EMI/mortgage payment and the new one, computed with the standard reducing-balance loan formula for each scenario. Dividing the closing costs by that monthly saving gives the number of months needed to recoup what you spent to refinance — a straightforward payback-period calculation. Lifetime savings goes further, comparing the total interest of both loans over their full remaining terms (not just the monthly difference), since a longer new term can quietly add back interest even while lowering the monthly payment.
A worked example
A $300,000 balance at 6.5% with 25 years remaining, refinanced into a new 25-year loan at 5.5% with $4,000 in closing costs: the payment drops from about $2,025.62 to $1,842.26 — a monthly saving of $183.36. That recovers the $4,000 closing cost in about 21.8 months, under 2 years. Over the full new term, the lifetime saving (after subtracting closing costs) comes to roughly $51,008 — a clear win, provided you plan to keep the loan for at least the 22-month break-even period.
Notes for the UK, US and India
In the US, refinancing is common whenever rates drop meaningfully below your current rate, and 'no-closing-cost' refinances exist (the lender rolls the cost into a slightly higher rate) — model both options here. In the UK, the equivalent move is remortgaging, usually timed around the end of a fixed-rate deal to avoid the lender's standard variable rate — check for an Early Repayment Charge on your current deal, which functions like a closing cost. In India, home loan balance transfers serve the same purpose; RBI rules bar prepayment penalties on floating-rate loans for individuals, so the main cost to weigh is the new lender's processing fee.
Frequently asked questions
Is refinancing worth it for a small rate drop?+
It depends on the break-even period versus how long you'll keep the loan. Even a 0.5–1% rate drop can be worth it on a large, long-remaining balance — run your exact numbers above rather than relying on a rule of thumb like 'only refinance for a 1%+ drop.'
Should I refinance into the same remaining term or a fresh new term?+
Matching your remaining term (rather than resetting to a full new 30-year term) captures the rate saving without extending how long you're in debt. Resetting the term lowers the monthly payment further but can add years of interest — check the lifetime savings figure, not just the monthly one.
What closing costs should I expect when refinancing?+
Typically 2–5% of the loan amount in the US, covering appraisal, origination, title and recording fees. UK remortgages and Indian balance transfers usually cost less, mainly legal/processing fees — get an exact quote from your lender rather than estimating.
How long do I need to keep a refinanced loan to make it worthwhile?+
At minimum, past the break-even period shown above. Many advisors suggest planning to keep the loan for several years beyond break-even, since job changes, moves or further rate drops can all shorten your actual holding period versus your plan.
Can I refinance with bad credit?+
It's harder and the rate offered will likely be worse, which can shrink or eliminate the savings this calculator shows. Get a real quote before assuming refinancing helps — a marginal rate improvement may not clear the closing-cost break-even point.