Mortgage Refinance Calculator

- May 11, 2025
| |

Compare your current mortgage with a refinance option to see if refinancing makes financial sense. Calculate potential savings, break-even point, and long-term benefits of refinancing your home loan.

Current Mortgage

£
%
years
years
£

New Refinance Loan

%
years
£
£

Additional Options

£
%
£
£

Understanding Mortgage Refinancing

Refinancing your mortgage means replacing your current loan with a new one, typically to secure a lower interest rate, change the loan term, or access home equity. The decision to refinance should be based on a careful analysis of costs and benefits.

When to Consider Refinancing
  • Lower Interest Rate: When market rates drop significantly below your current rate.
  • Improved Credit Score: If your credit has improved since your original mortgage.
  • Shorter Term: To pay off your mortgage faster and save on interest.
  • Longer Term: To reduce monthly payments (though this increases total interest).
  • Cash-Out: To tap into home equity for major expenses or debt consolidation.
Key Refinancing Factors
  • Break-Even Point: The time it takes for savings to exceed closing costs.
  • Closing Costs: Typically 2-5% of the loan amount, including fees for application, appraisal, title insurance, etc.
  • Interest Rate Differential: Generally, a difference of at least 0.5-1% justifies refinancing.
  • Loan-to-Value Ratio: Lower ratios (under 80%) typically secure better rates and avoid PMI.
  • Future Plans: Consider how long you plan to stay in your home relative to the break-even point.

Understanding the Mortgage Refinance Calculator

The Mortgage Refinance Calculator is a handy tool that helps homeowners evaluate the benefits of refinancing their mortgage. By inputting your current mortgage details and potential new loan terms, you can quickly see if refinancing is the right move. This tool offers insights into monthly savings, break-even points, and total savings over the life of the loan.

Input Your Current Mortgage Details

To get started, you'll need to provide some information about your current mortgage. This includes your current balance, interest rate, and loan term. Each of these factors plays a key role in calculating potential savings and determining if a refinance is worth it. You can also enter your current monthly payment and any taxes or insurance included in it.

Calculating New Loan Options

Next, you'll input your potential new loan details. This includes the new interest rate and loan term. You can specify how much cash you want to take out, if any, along with the estimated closing costs. These elements are important as they affect your new monthly payment and overall savings.

Why Refinance Your Mortgage?

Refinancing can be beneficial for several reasons. Homeowners often consider it to:

  • Secure a lower interest rate to save on monthly payments.
  • Change the term length of their loan for better fit.
  • Access equity for major expenses or debt consolidation.
  • Switch from an adjustable-rate mortgage to a fixed-rate mortgage.

Understanding Your Results

Once you’ve entered all your information, the calculator will provide instant results. You’ll see how much you can save each month and how long it will take to break even on closing costs. It will also show the total savings over the life of the new loan, helping you make an informed decision.

Comparing Monthly Payments

The Mortgage Refinance Calculator visualises your current and new monthly payments side by side. This comparison makes it easy to understand how refinancing impacts your budget. You can also see how the payments change over time, allowing for better long-term planning.

Analysing Interest Savings

In addition to monthly savings, the tool also calculates your total interest savings over the life of the loans. It gives you a clear picture of how much less you will pay in interest with the new mortgage compared to your current one. This analysis can be a compelling reason to move forward with refinancing.

Making a Smart Decision

The Mortgage Refinance Calculator provides a wealth of information to help you make the best choice for your Financial situation. With details on savings, break-even points, and interest comparisons, you’ll have the knowledge needed to determine if refinancing is a smart option for you.