Refinance Calculator
Estimate whether refinancing recovers its costs: monthly change, true break-even month, and the full-term effect — including the trap of a lower payment from a longer term.
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Estimated monthly payment reduction
₹278.08
Current ₹2,120.34 → proposed ₹1,842.26 per month.
- Break-even
- ≈ 1 year 5 months
- Net saving over 5 years
- ₹16,356
- Refinance costs
- ₹6,000
- Remaining interest (current)
- ₹3,36,101
- Interest on new loan
- ₹2,52,679
- Balance after 5 years (new vs current)
- ₹2,67,815 / ₹2,73,486
Refinancing reduces the monthly payment; the estimated break-even point is 1 year 5 months after refinancing.
Over the full term, the refinance is estimated to save about ₹77,423 after fees.
These estimates are for general planning only and are not mortgage approval, lending, tax, legal or financial advice. Actual rates, fees, taxes, insurance costs and lender decisions may differ.
Assumptions and conventions
- Per-period rate = nominal annual rate ÷ payments per year (standard quoted-rate convention). Reducing-balance method.
- The break-even is computed on net position (paid so far + balance owed), so a lower payment from a longer term is not counted as saving.
- Fees added to the loan increase the new balance instead of the upfront outlay; cash-out increases the new principal and offsets it as cash received.
- Both rates are fixed; no future rate changes are projected.
- Values are calculated at full precision and rounded for display; columns may differ from totals by a small rounding amount.
How the break-even is computed
A naive break-even divides fees by the monthly payment saving. That flatters refinances that lower the payment by stretching the term, because part of the “saving” is just slower repayment. This calculator instead simulates both mortgages in full and compares net positions: what you have paid so far plus what you still owe, month by month. The break-even is the first month the refinance is genuinely ahead — whether fees are paid upfront or added to the loan.
It also checks your planned horizon: a refinance that breaks even in month 38 is a poor deal if you expect to move in year 2, and the calculator says so.
Warnings the tool raises
It flags when the lower payment comes mainly from extending the term, when full-term interest rises despite the lower rate, when the break-even lands after your planned horizon or never arrives, and when cash-out borrowing increases the principal. These are stated as observations about your numbers, never as advice.
Formula
Both schedules use the standard amortisation formula. Net difference at month m = [paid on new loan + upfront fees + new balance − cash received] − [paid on old loan + old balance]. The refinance breaks even at the first m where this is ≤ 0.
Fees added to the loan raise the new opening balance instead of the upfront outlay; the same net-position test handles both treatments consistently. Full-term change = (new total interest + fees) − old remaining interest.
Assumptions
- Both rates are fixed; no rate changes are projected.
- All refinance costs are combined into one figure, paid upfront or financed as selected.
- Cash-out amounts are received at closing and increase the new principal.
- The horizon reflects your plans (time in the property or to the next refinance), not a prediction.
- Per-period rate follows the selected country's convention.
Content and formulas reviewed on 2026-08-06. See our methodology for how calculations are built and tested.
Worked example
A 300,000 balance at 7% with 25 years remaining costs about 2,120 a month. Refinancing to 5.5% over the same 25 years costs about 1,842 — a 278 monthly improvement — with 6,000 of fees paid upfront.
The naive break-even is 6,000 ÷ 278 ≈ 22 months; the net-position break-even arrives slightly sooner because the new loan also builds principal faster. Over a 5-year horizon the refinance is ahead by roughly 12,000, and full-term interest falls even after fees, so no warnings fire. Raise the new rate to 8% and the tool reports it never breaks even.
Frequently asked questions
What is the refinance break-even point?
The month at which the accumulated benefit of the new mortgage first covers its costs. This tool computes it on net position — payments made plus balance owed — rather than dividing fees by the payment difference, so term extensions cannot masquerade as savings.
Can a lower payment cost more overall?
Yes, and it is the most common refinancing trap: extending the term lowers the payment while increasing total interest. The calculator shows the full-term change alongside the monthly change and warns when they point in opposite directions.
Should fees be paid upfront or added to the loan?
Paying upfront costs cash now; financing them means paying interest on the fees for the rest of the term. Run both settings — the break-even and full-term figures update — and weigh the difference against what your cash could otherwise do.
What if I plan to move soon?
Set the planned horizon to your expected move date. If the break-even lands after it, the refinance loses money for your situation regardless of how good the rate looks.
Does this calculator include taxes?
No tax rules are applied. Where your country levies charges on refinancing, enter them within the combined costs figure.
These estimates are for general information only and are not financial, tax, legal, or investment advice. Rates, fees, and lending rules vary by lender and country. Actual costs and outcomes may differ from the projections shown.