Loan refinancing calculator
Compares your current loan with a new one and shows what switching is actually worth.
Fill in the fields and the result will appear here automatically.
Compare an outstanding loan with a replacement borrowing the same balance. Both use constant nominal rates and equal monthly payments, so differences come from rates, terms and entered switching costs. A smaller payment need not mean a smaller total: a longer term can increase it. The gain is a difference between nominal future sums, not a time-adjusted valuation.
How it works
Formula and logic
For each loan, i = r/1200 and A = S·i/[1−(1+i)^−n], or S/n at r = 0. Old total = Aold×nold; new total = Anew×nnew + cost. Gain = old total − new total; payment difference = Aold − Anew. Switching costs are paid upfront, not financed into principal. Intermediate payments are unrounded; displayed amounts use two decimals. Discounting and statutory full-cost APR are not calculated.
Example
Balance 2,000,000, 14% for 120 months versus 10% for 120 months with cost 30,000 gives payments 31,053.29 and 26,430.15 and nominal gain 524,776.76. For 800,000, switching from 18% over 48 months to 16% over 60 months with zero cost lowers the payment but gives gain −39,266.76. Identical loan terms give a gain equal to minus switching cost.
Fields and units
- Outstanding balance — $
- Current rate, % a year — unitless
- Months left — months
- New rate, % a year — unitless
- New term, months — months
- Cost of switching — $
How to use
- — Enter outstanding balance, current nominal rate and whole months remaining.
- — Enter the replacement rate and whole term for the same principal.
- — Add separately paid upfront switching costs; blank means zero.
- — Compare both totals and payments in one currency. Early exit and changing rates need another scenario.
Method and limitations
- Calculation method
- Formula and logic
- Data or methodology source
- Microsoft PMT: constant rate, equal payments and end-of-period timing CFPB, United States: switching costs and longer-term refinancing trade-offs
- Limitation
- Two constant-rate annuities on the same outstanding principal. Upfront costs are not financed; time value, floating rates, taxes, later insurance changes and early exit are omitted.
FAQ
Why is the gain sometimes negative?
Because a lower rate over a longer term can cost more in total even though the monthly payment falls. The payment difference and the total difference are shown separately for exactly this reason.
Should I enter the original amount or the balance?
The balance. Refinancing replaces what is left, not what you started with.
What counts as the cost of switching?
Only expenses actually caused by switching and paid separately: applicable valuation, registration, fees, penalties or extra insurance. Contract and jurisdiction determine them. Recurring expenses and financed fees are not scheduled by this model.
Does it assume the payment schedule is annuity?
Yes. Both are assumed to have equal monthly payments at constant nominal rates. This is a model choice, not a claim about most loans. Equal-principal schedules, changing rates and day-count rules change totals.
Is the same as an early repayment calculator?
No. That one keeps your loan and adds extra payments. This one replaces the loan with a different one.
Why is the nominal refinancing gain different from present value?
Cash amounts from different dates are added without discounting. Time-value analysis needs dates and a discount rate. Also consider planned early exit: this comparison carries both loans to completion.