Refinancing pays off when the interest saved exceeds the costs before you sell or repay. Watch out for resetting the clock – extending a loan you’ve paid for years can increase total interest even at a lower rate.
How to use the Refinance Calculator
- Current loan balance
- Current interest rate
- Remaining term
- New interest rate
- New loan term
- Refinancing costs
- Costs are
Results update as you type, and every field accepts the units shown in its menu.
How it works
Enter the current balance, rate and remaining months, then the new rate, term and refinancing costs.
Tips
- Compare loans by APR and total cost, not just the monthly payment.
- Extra payments go straight to principal and can save a lot of interest.
- Pay off the highest-rate debt first if you want to save the most money.
- Check for prepayment penalties before paying a loan off early.
Common mistakes to avoid
- Stretching a loan term to lower the payment without seeing the extra interest.
- Paying only the minimum on credit cards.
- Forgetting fees that are rolled into the loan.
Inputs explained
| Field | What to enter |
|---|---|
| Current loan balance | Amount in your currency |
| Current interest rate | In % |
| Remaining term | Units: years, months |
| New interest rate | In % |
| New loan term | Units: years, months |
| Refinancing costs | Amount in your currency |
| Costs are | Choose one: Paid upfront, Added to the new loan |
What each result means
- Current monthly payment = pmt([Current interest rate]÷1200, [Remaining term], [Current loan balance])
- New monthly payment = pmt([New interest rate]÷1200, [New loan term], [New loan amount])
- Monthly savings = [Current monthly payment] – [New monthly payment]
- Remaining interest – current loan = [Current monthly payment]×[Remaining term] – [Current loan balance]
- Total interest – new loan = [New monthly payment]×[New loan term] – [New loan amount]
Example values
How the main result changes when Current loan balance changes and everything else stays at the example values above:
| Current loan balance | Monthly savings |
|---|---|
| 125,000 | 118.64 |
| 187,500 | 177.96 |
| 250,000 | 237.28 |
| 312,500 | 296.6 |
| 375,000 | 355.91 |
| 500,000 | 474.55 |
Formula
Current payment = pmt(old rate ÷ 12, remaining months, balance)New payment = pmt(new rate ÷ 12, new term, balance + financed costs)Break-even = refinance costs ÷ monthly savingsLifetime savings = remaining old payments − new payments − upfront costsWorked example
Inputs — Current loan balance: $250,000; Current interest rate: 7.2 %; Remaining term: 27 years; New interest rate: 6.1 %; New loan term: 30 years; Refinancing costs: $5,000; Costs are: Paid upfront.
Results — Current monthly payment = $1,752.26; New loan amount = $250,000.00; New monthly payment = $1,514.99; Monthly savings = $237.28; Break-even = 21 months; Remaining interest – current loan = $317,733.21; Total interest – new loan = $295,395.31; Lifetime savings (after costs) = $17,337.90.
Frequently asked questions
When does refinancing make sense?
When you'll keep the loan past the break-even point and total costs fall.
How much does refinancing cost?
Mortgages: 2–5% of the loan; auto and personal loans often have little or no fee.
Should I refinance to a shorter term?
It raises the payment but cuts interest sharply.
What formula does the Refinance Calculator use?
Current payment = pmt(old rate ÷ 12, remaining months, balance).