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Refinance Calculator

Whether switching your loan actually saves money once fees are paid.

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years
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years

Keep this the same as the years left, unless you deliberately want to extend.

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Exit fee, valuation, legal and arrangement fees added together.

Results update as you type. Nothing is sent anywhere.

Worth it? —
Change in monthly payment — A negative figure means the new payment is higher.
Time to recover the switching cost —
Current monthly payment —
New monthly payment —
Total saved over the term — All interest and fees counted.

How this is worked out

Refinancing is not a question of whether the new rate is lower. It almost always is — that is why the offer landed on your doormat. The question is whether the saving outruns the cost of switching, and how long that takes.

Two figures matter, and they can disagree:

Break-even months. Divide what you pay to switch by what you save each month. If switching costs 1,500 and saves 150 a month, you are ahead after ten months. Move house or switch again before then and you have lost money.

Lifetime saving. Total everything you would pay on the current loan, total everything you would pay on the new one including fees, and take the difference. This is the figure that catches the most common refinancing trap.

That trap is the term. Refinancing 18 remaining years into a fresh 25-year loan will always cut your monthly payment, because you spread the debt over seven more years. It is not a saving; it is usually thousands more in interest, wearing a disguise. Keep the new term equal to the years you have left and you compare like with like.

A worked example

You owe 220,000 with 18 years left at 5.4%. A new lender offers 4.2%, and switching costs 1,500.

  • Current payment: about 1,657
  • New payment over 18 years: about 1,527
  • You save about 130 a month, so you recover the 1,500 in about 12 months
  • Over the full 18 years you save roughly 26,700 after fees

Now take the same offer but over a fresh 25-year term. The payment drops to about 1,185 — nearly 500 a month less, which feels wonderful. But you would pay around 41,000 more in total than simply staying put. The monthly number improved and the outcome got worse.

What this doesn't cover

  • Assumes both loans are fixed-rate repayment loans. If your current deal is on a variable rate about to change, run the comparison against the rate you expect to be on, not today's.
  • Early repayment charges vary enormously and are often a percentage of the balance. Get the exact figure from your lender and put it in the switching cost.
  • It does not account for what you might do with the monthly saving. Money redirected into paying down other debt changes the picture.

Common questions

How much of a rate drop makes switching worthwhile?

There is no universal threshold — it depends entirely on your balance and your fees. On a large balance, half a point can be worth switching for. On a small balance near the end of its term, even two points may not cover the fees. Run your own numbers rather than trusting a rule of thumb.

What if I might move house soon?

Compare the break-even months against how long you realistically expect to stay. If you may move within the break-even period, switching loses money. Some loans are portable to a new property, which changes this — ask.

Does refinancing hurt my credit score?

A new application usually causes a small, temporary dip because of the credit check and the new account. It normally recovers within months. It is rarely a reason on its own to skip a genuinely better deal, but avoid applying to several lenders in quick succession.

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