Mortgage refinance calculator
A lower rate cuts the payment - but restarting a 30-year clock can still cost more interest overall. This shows the monthly saving and break-even, and then the total-interest comparison that most refinance calculators quietly skip.
Why these starting numbers? The default gap between the current and new rate is deliberately modest, because a small difference is the case worth testing. A large gap makes refinancing look obviously worthwhile and hides the term-reset effect this tool exists to show. Replace both rates with your own before drawing any conclusion.
What does the break-even point actually tell you?
Divide the closing costs by the monthly saving and you get the break-even: how long you must keep the new loan before the fees have paid for themselves. Sell or refinance again before that and the deal lost money regardless of the rate. But break-even alone hides the second question.
What is the term-reset trap?
Refinance 23 remaining years into a fresh 25 or 30-year loan and the payment drops twice - once from the rate, once from the stretch. The stretch is not savings; it is the same debt paid more slowly, and it can add tens of thousands in total interest even at a lower rate. So this page always shows both: what happens to the monthly payment, and what happens to the total interest from today to the end of each loan, closing costs included. A refinance that wins on both is a clear yes; one that only wins on the monthly payment is a decision about cash flow, and worth making with eyes open. Matching the new term to your remaining years keeps the comparison clean.
Common questions
What is mortgage refinancing?
Refinancing replaces your existing mortgage with a new one, usually to get a lower rate, change the term, or switch lenders. The new loan pays off the old balance, and closing costs apply just like they did on the original loan.
What is the break-even point on a refinance?
It is closing costs divided by the monthly saving - how many months it takes for the saved payments to cover the cost of refinancing. A $4,000 closing cost against a $150 monthly saving breaks even in about 27 months.
What is the term-reset trap?
Refinancing remaining years into a fresh longer loan drops the payment twice - once from the lower rate, once from spreading the same debt over more years. The second part is not a saving, it is the same balance repaid more slowly.
Does a lower interest rate always mean a better refinance?
No. A lower rate paired with a longer term can still cost more in total interest than staying on the original loan. Always check the total-interest comparison across the full remaining life of both loans.
What closing costs should I expect when refinancing?
Typically 2-5% of the loan balance, covering application fees, property valuation, legal or settlement fees, and discharge fees on the old loan.
Should I refinance to a shorter term instead of a longer one?
If you can afford the higher payment, a shorter term at a lower rate compounds both advantages. The trade-off is a higher required monthly payment.
For general information and education only. This tool shows an illustration based on the figures you enter - it does not know your circumstances, tax position, or appetite for risk, and nothing here is financial, investment, tax, or legal advice. It is not intended to be relied on when making a decision about any particular financial product. Before acting, check the figures against your own documents and consider advice from a licensed financial professional in your country.