Refinance Calculator
What refinancing saves each month, and when it pays back its costs.
Good to know. A lower payment over a longer term can still cost more in total. Check both lines.
Not financial advice. Uses only the numbers and rates you enter — no live data.
How it works
In plain words
Both payments come from the standard repayment formula: the current one on what you owe over the years left, the new one on the same balance at the new rate and term. The break-even point is the closing costs divided by the monthly saving. The lifetime difference compares everything left to pay on each path, closing costs included.
The formula
Payment = B × i ÷ (1 − (1 + i)^−n) Break-even (months) = closing costs ÷ monthly saving Lifetime = old payment × old months − (new payment × new months + costs)
Worked example
Owing 300,000 at 7.5% with 27 years left costs 2,162.20 a month. Refinancing into a new 30-year loan at 6.25% brings it to 1,847.15, a saving of 315.05 a month, so 6,000 of closing costs are paid back after 20 months. Because the new loan runs three years longer, it saves 29,578.71 in total, far less than 315.05 a month suggests.
Sources
- Brealey, Myers and Allen, Principles of Corporate Finance, chapter 2 The standard formulas for loan payments, compounding and present value, the same as a spreadsheet’s PMT and FV.
Sources checked September 29, 2026. 5 automated tests check its answers on every change.
About the refinance calculator
Refinancing replaces your mortgage with a new one, usually to get a lower rate. The monthly saving is the headline, but two other numbers decide whether it is worth it: how long it takes to earn back the closing costs, and what you pay in total over the rest of the loan.
The break-even point is simple: divide the closing costs by the monthly saving. If you expect to move or sell before then, refinancing loses money. If you’ll stay well past it, the saving is real.
The lifetime difference catches the trap. Starting a fresh 30-year loan when you have 27 years left lowers the payment partly by stretching it out. You may pay more interest in total even at a lower rate. Choosing a new term close to the years you have left, or paying a little extra each month, keeps the saving honest.
Closing costs in the US are often 2–5% of the loan, including lender fees, appraisal, title and any points you buy to lower the rate. Some lenders roll them into the loan; that raises the balance, so enter them as costs here either way. In the UK and elsewhere, a remortgage often has smaller fees but early repayment charges on the old loan; add those to the costs.
Questions people ask
When does refinancing make sense?
When you will keep the loan well past the break-even point, and the lifetime difference is a saving. A lower rate alone is not enough if the fees are high or the new term is much longer.
How is the refinance break-even point calculated?
Closing costs divided by the monthly saving. 6,000 of costs and a 315.05 saving break even after 20 months.
Why can a lower payment cost more in total?
A new 30-year loan spreads what you owe over more years. The monthly payment falls, but you pay interest for longer.
Should I include cash-out or rolled-in fees?
Enter the balance you will actually borrow. Fees rolled into the loan still count as costs, because you pay them back with interest.