Home Loan Refinance Breakeven Calculator
Compare your current monthly payment with a lower refinance rate and see how many months it takes to recover the refinance cost.
Enter your numbers
Example: 2450000
Example: 9
Example: 8
Example: 180
Example: 45000
Recent
Formula
How the calculation works
Refinancing only pays off when the lower monthly instalment saves enough money to cover the fees and charges you pay to switch.
The calculator works out both payments with the standard annuity formula, divides the upfront cost by the monthly saving, and gives the number of months needed to break even.
Common mistakes
- Ignoring the refinance cost and comparing only interest rates, which makes a switch look profitable even when the fees never get recovered.
When to use it
- Use it before signing a refinance offer, and skip it if you expect to sell or repay the loan sooner than the breakeven month.
Worked example
On a 2450000 loan over 180 months, moving from 9 percent to 8 percent cuts the payment from 24849.53 to 23413.48, saving 1436.06 a month and recovering a 45000 cost in about 31.34 months.
Common questions
How many months should the breakeven be to make refinancing worthwhile?
Ideally well under the remaining term and comfortably before you plan to sell or repay, so the savings clearly outweigh the upfront cost.
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