Refinance break-even calculator
Refinancing is worth it only if you keep the loan past the break-even point. This finds that point.
%
%
years
Months to break even
19.2
- Monthly saving
- 234.25
- Current payment
- 1807.02
- New payment
- 1572.77
- Lifetime saving after costs
- 65 775.35
Show the working
- Current balance = 250 000
- Current rate = 7.25
- Years remaining = 25
- New rate = 5.75
- New term = 25
- Closing costs = 4500
- i_old = 7.25 / 100 / 12 = 0.006 041 67
- n_old = 25 * 12 = 300
- g_old = (1 + 0.006 041 67)^300 = 6.092 43
- Current payment = 0.006 041 67 == 0 ? 250 000/300 : 250 000 * 0.006 041 67 * 6.092 43 / (6.092 43 - 1) = 1807.02
- i_new = 5.75 / 100 / 12 = 0.004 791 67
- n_new = 25 * 12 = 300
- g_new = (1 + 0.004 791 67)^300 = 4.195 73
- New payment = 0.004 791 67 == 0 ? 250 000/300 : 250 000 * 0.004 791 67 * 4.195 73 / (4.195 73 - 1) = 1572.77
- Monthly saving = 1807.02 - 1572.77 = 234.251
- Months to break even = 234.251 > 0 ? 4500 / 234.251 : 0 = 19.2102
- Lifetime saving after costs = 1807.02 * 300 - 1572.77 * 300 - 4500 = 65 775.3
Values are shown to six significant figures here; the arithmetic itself runs on exact fractions and is only rounded where a number is printed.
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The formula
- break-even months = closing costs / monthly saving
Extending the term lowers the payment but can raise total interest even at a lower rate — watch the lifetime figure, not just the monthly one.
This is arithmetic, not financial advice. Real products carry fees, tax treatment and terms that no formula captures.