Refinance
Compare old vs new loan rate.
What does Refinance mean?
Refinancing means replacing your current loan with a new one, typically at a lower interest rate. The goal is to reduce monthly repayments and total interest paid. However, refinancing comes with costs — application fees, legal fees, and discharge fees — so it is important to calculate whether the savings outweigh the costs and how long it takes to break even.
How to calculate Refinance
The calculator computes the monthly repayment for both the current rate and the new rate using the standard annuity formula. Monthly Savings = Current Payment − New Payment. Total Savings = (Monthly Savings × Remaining Months) − Refinancing Costs. Breakeven Month = Refinancing Costs / Monthly Savings (rounded up). For example, refinancing a $300,000 loan from 7% to 5.5% over 25 years with $3,000 in fees saves about $280/month and breaks even in 11 months.
FAQ
Refinancing is worthwhile when the total savings exceed the costs. As a rule of thumb, if you can reduce your rate by at least 0.5–1% and plan to keep the loan for longer than the breakeven period, refinancing is likely beneficial.
Common costs include application or establishment fees, property valuation fees, legal or conveyancing fees, discharge fees from your current lender, and potentially lenders mortgage insurance if your equity has decreased. Total costs typically range from $1,000 to $5,000.
Extending the term lowers monthly payments but increases total interest paid over the life of the loan. If possible, keep the same remaining term or shorter to maximize interest savings. This calculator assumes the same remaining term for both rates.
Yes, but fixed-rate loans often have break costs that can be substantial. These should be included in the refinancing costs field. Variable-rate loans typically have lower or no exit costs.
Review annually or whenever the central bank changes rates. Also check when your fixed-rate period expires, when you see competitive offers advertised, or when your financial situation improves (higher income or equity may qualify you for better rates).
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