Refinance Calculator
Compare your current loan with a new one. Enter the details of both loans and this refinance calculator shows your monthly saving, the break-even month and the total saving over the remaining term.
Estimates only — rates and closing costs vary by lender. Get a real quote before deciding.
How to use this refinance calculator
This refinance calculator puts your current loan and a new loan side by side, so you can see whether refinancing is worth it before you talk to a lender. You only need six numbers, and the results update as you type.
Step 1: Enter your current loan: the balance you still owe, your current annual interest rate and how many years are left on the loan.
Step 2: Enter the new loan: the annual interest rate the lender is offering, the new loan term in years and the closing costs you would pay once, up front.
Step 3: Read the results: your current and new monthly payments, how much you would save each month, the month when the saving has paid back the closing costs, and the total saving over the remaining term.
Worked example
Take a loan with a balance of $200,000 at 7% interest and 25 years (300 months) left. The monthly payment is $1,413.56, and over the remaining term you would pay $424,068.00 in total.
Now suppose a lender offers you 5% over 25 years, with closing costs of $4,000. The new monthly payment is $1,169.18, so you save $244.38 every month. The new total, including the closing costs, is $354,754.00.
Divide the closing costs by the monthly saving to find the break-even point: $4,000 divided by $244.38 is 16.4 months. From month 17 onwards, the saving is pure gain. Over the remaining term the total saving is $69,314.00 — $424,068.00 minus $354,754.00.
What refinancing means
Refinancing means taking out a new loan to pay off your old one. The old loan is closed, and you start paying the new loan instead, usually at a lower interest rate or with a different term. The loan itself does not disappear — you still owe the same balance — but the terms change.
The catch is the closing costs. Lenders charge fees to set up a new loan, and you pay them once, at the start. That is why a lower rate does not always mean a better deal: the monthly saving has to be big enough, and last long enough, to pay back those costs.
Refinancing is most common with home loans, but the same idea works for any loan with a fixed rate and a fixed term. The maths is the same either way: compare the two monthly payments, then weigh the saving against the one-off cost.
When it is worth it
The first test is the break-even month. If it comes well before the loan ends — say, within the first year or two of a 25-year loan — refinancing is usually worth a closer look. If the break-even month is near the end of the loan, there is little time left to enjoy the saving.
The second test is the size of the monthly saving. Saving $244 a month is a real difference to a household budget. Saving $10 a month is probably not worth the paperwork, the credit check and the risk that rates move while you wait.
The third test is how long you will keep the loan. If you plan to move house or pay the loan off early, you may never reach the break-even month. In that case, staying with the current loan is usually the better choice, even at a higher rate.
Finally, remember that a longer new term cuts the monthly payment but adds years of interest. This refinance calculator shows the total paid on each loan, so you can see whether the lower payment is really saving you money overall, or just spreading the same cost over more years.
Frequently asked questions
What is refinancing?
Refinancing is replacing your current loan with a new one, usually at a lower interest rate. The new lender pays off the old loan, and you repay the new lender instead, under the new terms.
What is the break-even point?
The break-even point is the month when your total monthly savings have added up to the closing costs. Before that month you are still paying off the cost of refinancing; after it, every monthly saving is money kept.
How much does refinancing cost?
Closing costs vary by lender and by loan, but a few thousand dollars is typical for a home loan. This refinance calculator lets you enter any figure, so try the lender’s exact quote to see how it changes the break-even month.
Is a lower rate always worth it?
No. If the closing costs are high or the monthly saving is small, you may never break even. A lower rate only helps if the saving lasts long enough to pay back the cost of setting up the new loan.
Is this exact?
No — it is an estimate. Your lender’s real quote may differ, because rates, fees and the exact balance change over time. Use this refinance calculator to compare offers, then get a real quote before you decide.