How do I calculate whether refinancing is worth it?

Divide the total refinancing costs by your monthly payment saving to find the break-even point in months. If you plan to stay in the property beyond that date, refinancing is likely worthwhile. Also consider the total interest saved over the full remaining loan term, net of all fees.

What is a break-even point in refinancing?

The break-even point is the number of months it takes to recoup the upfront refinancing costs through lower monthly payments. For example, if refinancing costs $3,000 and saves $150 per month, the break-even is 20 months. Staying past this point means you come out ahead.

How much does refinancing typically cost?

In the US, closing costs typically run 2-5% of the loan amount. In the UK, remortgage fees range from £500 to £2,500 including product, legal, and valuation fees. In Australia, discharge and establishment fees total around $500-$1,000. In Canada, penalties, legal fees, and registration costs can reach $3,000-$5,000 or more if breaking a fixed-rate mortgage early.

Does refinancing reset my loan term?

It depends on the terms you choose. If you refinance a 25-year mortgage after 5 years into a new 25-year loan, you extend the total repayment period by 5 years. If you refinance into a shorter term, you pay off sooner but with higher monthly payments. The calculator lets you choose the new term independently.

Can I refinance if my property value has fallen?

Negative equity makes refinancing very difficult, as most lenders require a minimum amount of equity. You may be limited to your current lender. In some countries, government-backed refinance schemes exist for borrowers with low or no equity. Improving your credit score and waiting for property values to recover can also help.

Loan Calculator

Refinance Calculator

Find out how much you could save by refinancing or remortgaging. See your monthly saving, break-even point, and total interest saved — for the US, UK, Australia, and Canada.

Enter Your Loan Details

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Current Loan

Current Loan Balance (USD)

Current Interest Rate (%)

Remaining Term (years)

New Loan (After Refinancing)

New Interest Rate (%)

New Loan Term (years)

Refinancing Costs / Fees (USD)

Includes origination, appraisal, title insurance, and other closing costs.

The new interest rate is not lower than your current rate. Refinancing in this scenario would increase your monthly payment. Consider waiting for rates to improve or reviewing your inputs.

Monthly Saving

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Break-Even Point

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Total Interest Saved

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net of fees

You may not recoup the refinancing costs within 5 years — consider carefully whether you plan to stay in the property long enough to benefit.

Full Breakdown

This is an estimate for informational purposes only. Actual savings depend on your specific loan terms, fees, credit profile, and lender. Consult a mortgage adviser before making refinancing decisions.

How Refinancing Works

Monthly Payment Formula

Monthly payments are calculated using the standard amortization formula: M = P[r(1+r)^n] / [(1+r)^n-1], where P is the loan balance, r is the monthly interest rate, and n is the number of payments. The new rate and term determine your new payment.

Break-Even Point

The break-even point tells you how many months it takes to recover the upfront refinancing costs through lower payments. If you sell or move before this point, refinancing will have cost you money. If you stay beyond it, you are ahead.

Total Interest Comparison

Total interest is the sum of all payments minus the original loan balance. Refinancing to a lower rate reduces this figure, but extending the term increases it. The calculator shows gross interest saved minus refinancing fees to give you the true net saving.

Rate vs Term Trade-off

Refinancing into a shorter term (e.g., from 25 to 15 years) saves significantly on total interest but increases monthly payments. Refinancing into a longer term reduces monthly payments but may cost more overall. The right choice depends on your cash flow and financial goals.

Frequently Asked Questions

Select your country above to see relevant FAQs.

Refinancing generally makes sense when the new rate is at least 0.5-1% lower than your current rate, when you plan to stay in the home past the break-even point, and when your credit score has improved since origination. Even a half-point rate reduction can save tens of thousands of dollars over a 25-30 year mortgage. Use the break-even calculator above to verify it works for your specific situation.

Closing costs typically run 2-5% of the loan amount, covering origination fees, appraisal, title insurance, prepaid interest, and government recording fees. On a $320,000 loan that is $6,400 to $16,000. No-closing-cost refinances are available — the lender rolls the fees into a slightly higher rate or adds them to the loan balance, which suits buyers who plan to move within a few years.

A cash-out refinance replaces your current mortgage with a larger one, and you receive the difference in cash. For example, if you owe $200,000 on a home worth $350,000, you could refinance for $250,000 and receive $50,000 in cash. This is commonly used for home improvements or consolidating higher-rate debt. It resets your amortization and increases your loan balance, so weigh the costs carefully.

Mortgage interest on a refinanced loan remains deductible up to $750,000 of loan principal for loans originated after December 2017. Cash-out proceeds used specifically for buying, building, or substantially improving your home may preserve the full interest deduction on the cash-out amount. Discount points paid on a refinance are generally deducted over the life of the loan rather than in the year paid. Consult a tax professional for your specific situation.

15-year mortgages carry lower interest rates (typically 0.5-0.75% less than 30-year) and reduce total interest paid dramatically — often by hundreds of thousands of dollars. However, monthly payments are significantly higher. A 30-year refinance maximises monthly payment reduction and cash flow flexibility. The right answer depends on how long you plan to stay in the home, your income stability, and whether you have other high-interest debt to prioritise.

The most common time to remortgage is when your current fixed-rate or tracker deal is about to expire — typically after 2 or 5 years. Reverting to the Standard Variable Rate (SVR) can cost hundreds of pounds extra per month. You should also consider remortgaging if rates have fallen significantly from your deal rate, if your loan-to-value has improved (allowing access to better rate tiers), or if you want to release equity for home improvements.

Costs include a product or arrangement fee (£0 to £2,000 or more depending on the deal), a valuation fee (£0 to £500, often free on competitive deals), and legal conveyancing fees (£300 to £700, also often free). Some deals charge no upfront fees but have a higher rate. Always calculate the total cost of credit over the deal period — not just the headline rate — to make a fair comparison between deals.

The SVR is the default rate your lender charges once your fixed-rate or tracker deal expires. Each lender sets its own SVR, typically 2-4% higher than the best available market rates. Falling onto the SVR is usually very expensive — a borrower with £250,000 remaining could pay £200-£400 more per month than on a competitive fixed deal. Always arrange a remortgage to start the day your current deal ends to avoid even one month on the SVR.

Yes. If your property has increased in value since you last mortgaged, you can borrow more against it — a process called equity release or further advance. This is commonly used for home improvements, purchasing a second property, or consolidating debt. Be aware that borrowing more increases your total debt and monthly commitments, and moving to a higher loan-to-value band may mean a higher interest rate. Your lender will conduct an affordability assessment.

Porting allows you to transfer your existing mortgage deal — including the interest rate and remaining fixed-rate period — to a new property when you move home. This avoids paying an early repayment charge (ERC) on the existing deal. However, you must pass a new affordability assessment, and the new property must meet the lender criteria. If you need to borrow more, additional borrowing is typically at the lender current rate, resulting in a blended rate across two sub-accounts.

Refinancing makes sense when a significantly lower rate is available from another lender, when you want to switch from a variable to a fixed rate (or vice versa) to better manage rate risk, when your property value has increased and improved your loan-to-value ratio (LVR) to access better rate tiers, or when your current lender is simply uncompetitive with the market. The RBA cash rate environment and your remaining loan size affect the potential saving.

Costs include a discharge fee from the existing lender ($150 to $400), a new lender application or establishment fee ($0 to $600, often waived on competitive deals), and government mortgage registration and transfer fees ($100 to $300 depending on your state or territory. Many Australian lenders now offer cashback refinance deals ($2,000 to $4,000) to attract borrowers switching from another lender, which can offset switching costs substantially.

Cashback incentives are lump-sum payments ($2,000 to $4,000 or more) offered by Australian lenders to attract new refinancing customers. They effectively subsidise the cost of switching and can make a lower-rate deal even more attractive in the short term. However, always compare the total cost over the fixed-rate or promotional period — a deal with a higher rate but large cashback may cost more overall than a lower-rate product without cashback.

When assessing your ability to service a new loan, most Australian lenders apply a 3% serviceability buffer above the new loan rate (the APRA mandated floor). For example, if refinancing at 5.9%, you must demonstrate you could afford repayments at 8.9%. Some lenders apply a reduced 1% buffer for borrowers refinancing with a clean repayment history and no cash-out, under the ASIC responsible lending framework. This reduced buffer helps more borrowers qualify for a refinance.

A comparison rate combines the interest rate and most mandatory ongoing fees and charges into a single annual percentage figure, making it easier to compare the true cost of different home loans. Australian lenders are legally required to disclose the comparison rate alongside the advertised rate. The comparison rate assumes a $150,000 loan over 25 years — it may not accurately reflect the cost for your specific loan amount and term, so always run your own numbers.

Refinancing makes sense when your current fixed-rate term is approaching renewal (avoiding the posted rate), when rates have fallen enough that the interest saving exceeds the break penalty, when you want to access built-up home equity, or when consolidating higher-rate debt saves money on a net basis. The IRD penalty on fixed-rate mortgages can be large, so always calculate the break-even before proceeding.

The largest cost of breaking a fixed-rate mortgage is the prepayment penalty — either 3 months of interest or the interest rate differential (IRD), whichever is greater. Additional costs include discharge and registration fees ($200 to $500), legal fees ($700 to $1,500), and an appraisal ($300 to $500). Total switching costs can run from $2,000 to $10,000 or more if the IRD is large — always get a penalty quote from your lender before proceeding.

The IRD penalty applies when breaking a fixed-rate mortgage before the end of its term. It is calculated as the difference between your contracted rate and the lender posted rate for the remaining term, multiplied by your remaining principal and remaining term in years. If rates have fallen significantly since you locked in, the IRD can be thousands or even tens of thousands of dollars. Variable-rate mortgages typically have a much lower penalty of just 3 months of interest.

Run a full break-even analysis before deciding. Add up all costs (IRD penalty, legal fees, registration, appraisal) and divide by the monthly payment saving at the new rate. If the break-even period is shorter than your remaining ownership horizon, breaking makes financial sense. In practice, breaking a fixed-rate mortgage is rarely worthwhile unless you are more than 1-2 years away from renewal and rates have dropped substantially from your locked-in rate.

All refinances at federally regulated lenders (banks and most credit unions) require passing the OSFI mortgage stress test at the higher of 5.25% or your new rate plus 2%. If you are switching lenders, you must qualify under this test in full — this can disqualify some borrowers who qualified at origination when their income was different. Staying with your existing lender at renewal may allow you to avoid the stress test, though you will be limited to that lender rates at renewal.