Mortgage refinancing break-even

Monthly payment = P × r ÷ (1 − (1 + r)^−n), where r = annual rate/1200 and n is months; at 0% use P/n. New principal = balance + fees if financed. Cost at horizon = payments made + remaining balance + fees paid upfront. Refinancing saving = current cost − new cost. First break-even is the first monthly checkpoint with a non-negative saving. Enter today's outstanding mortgage balance, current interest rate and remaining term, then the new rate, term and refinancing fees. Choose whether fees are paid upfront or added to the new balance. The calculator simulates both repayment loans month by month and compares them at the same chosen horizon, rounded to the nearest month. It includes payments already made and the balance still owed, so a smaller payment alone does not automatically count as a saving. A positive saving favours refinancing; a negative saving means keeping the current loan costs less at that horizon. The first break-even month searches across both loan terms; a longer new term can reverse an earlier saving. Rates stay fixed throughout this scenario.

With current outstanding mortgage balance 200,000, current annual interest rate (%) 6, current remaining term (years) 25, new annual interest rate (%) 4.5, new mortgage term (years) 25, total refinancing fees 3,000, how long until sale or another refinance (years) 5, how refinancing fees are paid Pay fees upfront, the estimated refinancing saving at the chosen horizon is $11,764.64. Current monthly payment: $1,288.60; New monthly payment: $1,111.66; Initial monthly payment reduction: $176.94; Current balance at horizon: $179,864.17; New balance at horizon: $175,715.81; First break-even month: 13 months.

This is an estimate based on the inputs and assumptions shown on this page, not professional advice. Check anything with financial, health or safety consequences independently.

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It tracks monthly payments and the remaining debt for each loan. At each checkpoint it adds payments made, the outstanding balance and any upfront fees. Refinancing breaks even when the new loan's total is no higher than the current loan's total under the entered assumptions.

That shortcut compares cash flow but can miss differences in the debt still owed, especially when the new term is longer. This calculator includes outstanding balances at the same horizon. A lower payment can partly come from repaying principal more slowly.

The fees increase the new principal and therefore affect payments, interest and the balance still owed. They are counted through the loan rather than as an upfront cash payment. The calculator does not charge financed fees a second time upfront.

Yes. A longer replacement term can produce an early advantage that later reverses as interest continues to accrue. First break-even is only the first monthly crossing. Also compare the saving at the time you expect to sell or refinance again.

Its payments stop and its remaining balance becomes zero. The calculator continues tracking the other loan to the same horizon. It does not assume you invest the released monthly payment or earn a return on the difference.

Use the outstanding balance and remaining term on your current loan, plus the nominal interest rate and term for the replacement loan. Enter relevant refinancing and early-repayment costs. The model holds rates fixed and does not include taxes, insurance or lender eligibility checks.