Refinance calculator
See whether switching to a new loan lowers your payment, how soon it pays back the costs and what you save overall.
Results
Monthly saving
$194.18
This is how much less you pay each month by switching from 7% to 5.75% over 25 years, and the saving covers the switching costs in 1 year and 9 months.
- New monthly payment
- $1,572.77
- Current monthly payment
- $1,766.95
- Switching costs paid back in
- 1 year 9 monthsTime for the monthly saving to cover the switching costs
- Interest saved over the loan
- $58,254.60Negative means you pay more interest
- Overall saving after switching costs
- $54,254.60
- Interest left on current loan
- $280,084.40
- Interest on new loan
- $221,829.80
Total paid over time
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How it works
We work out the level monthly payment on what you owe today under your current loan and under the new one. The difference is your monthly saving, and dividing the switching costs by it shows how many months it takes to earn them back. We also total the interest left on each loan, so you can see whether you come out ahead over the full term.
Formula
- Payment = balance × r ÷ (1 − (1 + r)^−n), r = rate ÷ 12 ÷ 100, n = years × 12
- Monthly saving = current payment − new payment
- Months to pay back = switching costs ÷ monthly saving (rounded up)
- Overall saving = interest left on current loan − interest on new loan − switching costs
Frequently asked questions
Why can my payment drop while I still lose money overall?
If the new loan runs for longer than the years left on your current one, each payment is smaller but you make many more of them. The extra years of interest can outweigh a lower rate. Compare the overall saving, not just the monthly saving.
What counts as switching costs?
Anything you pay to move the loan, often called closing costs: arrangement or application fees, valuation and legal fees, and any penalty for repaying your current loan early. If the lender lets you add these to the new loan instead, add them to the balance and set switching costs to zero.
How should I use the time to pay back the switching costs?
It tells you how long you need to keep the new loan before the switch pays for itself. If you expect to sell or switch again before then, refinancing will probably cost more than it saves.
Can I shorten my term when I refinance?
Yes. Enter a shorter new term to see the effect. The payment may rise, but you will usually pay much less interest overall, which shows up as a larger overall saving.
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Results are estimates only, not financial advice. Read the disclaimer.