Refinance Calculator
Compare your current loan with a new rate and term
Refinance Calculator: Find Out If a New Loan Will Save You Money
Our free refinance calculator compares the loan you have now with a new loan at a different rate or term. Enter your original loan, the years already paid, and the new rate, term and closing costs. You get the new payment, the monthly savings, the break-even point and the total you would save or spend over the life of the loan.
Quick answer: a $300,000 loan at 6.5% for 30 years, with 5 years already paid, has a balance of about $280,833 and a payment of $1,896.20. Refinanced to 5% over 25 years with $4,000 in closing costs, the payment becomes $1,641.72. That saves $254.48 a month, the costs are earned back in 1 year 4 months, and the total saving is about $72,345.
What Is Refinancing?
Refinancing means replacing your current loan with a new one, usually to get a lower rate or change the length of the loan. The new loan pays off the old balance and you start paying on the new terms. It is most common with home loans, but the same idea applies to car and student loans.
How the Refinance Calculation Works
The calculator first finds what you still owe on the current loan, then compares the cost of finishing it with the cost of the new loan. The monthly payment on any fixed loan comes from the standard payment formula:
The table below shows the same example loan refinanced at different rates over 25 years, with $4,000 in closing costs paid upfront.
| New rate | New payment | Monthly savings | Break-even | Total savings |
|---|---|---|---|---|
| 6.00% | $1,809.41 | $86.79 | 3 years 11 months | $22,038 |
| 5.50% | $1,724.56 | $171.64 | 2 years | $47,493 |
| 5.00% | $1,641.72 | $254.48 | 1 year 4 months | $72,345 |
| 4.50% | $1,560.96 | $335.24 | 1 year | $96,573 |
Break-Even Point and Closing Costs
Closing costs are the fees for the new loan, such as the lender charge, appraisal, title work and recording. They are why a lower rate does not always mean a better deal. The break-even point shows how many months of savings it takes to earn those costs back. If you will keep the loan longer than that, the refinance pays off. You can pay the costs at closing or add them to the loan. Adding them lowers the total savings in the example to about $69,330, because you pay interest on them.
Shorter or Longer New Term
The new term matters as much as the rate. A shorter term raises the payment but cuts interest, while a longer term lowers the payment and adds interest. This table keeps the 5% rate and $4,000 costs and changes only the term.
| New term | New payment | Interest on new loan | Total savings |
|---|---|---|---|
| 15 years | $2,220.81 | $118,913 | $165,116 |
| 20 years | $1,853.37 | $163,977 | $120,052 |
| 25 years | $1,641.72 | $211,683 | $72,345 |
| 30 years | $1,507.57 | $261,893 | $22,135 |
For the lowest payment, a longer term helps. For the lowest total cost, a term near the time left on your current loan, or shorter, usually works better. The amortization calculator shows how a balance falls payment by payment, and the mortgage calculator estimates a new home loan from scratch.
When Refinancing Makes Sense
It tends to work when rates have dropped since you borrowed, your credit has improved, or you plan to stay past the break-even point. It tends not to work when you are close to paying the loan off, plan to move soon, or face high closing costs compared with the monthly savings. The payment calculator and the interest calculator can check the numbers from another angle.
Who Uses a Refinance Calculator?
Homeowners comparing a new rate, buyers who borrowed when rates were higher, people planning to shorten a mortgage, landlords reviewing property loans, and anyone weighing a lender's offer. Results are estimates for general information, not financial advice, and your lender's final figures depend on your credit, property and loan type.
How to Use This Refinance Calculator
Enter your original loan
Type the original loan amount, interest rate and term in years from your loan papers.
Set the years already paid
The calculator uses this to work out the balance you still owe.
Enter the new rate and term
Use the rate and length from the refinance offer you are considering.
Add the closing costs
Enter the total fees and choose whether you pay them upfront or add them to the new loan.
Click "Calculate Refinance"
See the new payment, monthly savings, break-even point and total savings or extra cost.