280,000 from 6.75% to 5.5%, fees of 4,500
$280,000.00 at 6.75% for 324 months, refinanced at 5.5% for 360 months. Fees $4,500.00.
Payment $1,880.48 becomes $1,589.81. Break-even 1 year 3 months. Interest after fees $32,444.76.
Refinance break-even calculator
How many months the lower payment takes to cover the fees.
The fees are cash you pay now. They are not added to the new loan. Tax is not included.
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Break-even
1 year 3 months
The lower payment covers the fees in 1 year 3 months.
You save $290.67 a month.
- Payment now
- $1,880.48
- Payment after
- $1,589.81
- Interest after fees
- $32,444.76
- Fees
- $4,500.00
Next: Mortgage pointsThe same idea, paid as discount points.
How this is calculated
Break-even on a lower payment
months = fees ÷ (old payment − new payment)
| payment | The standard amortizing payment on the balance, rate, and term. |
|---|---|
| fees | What you pay to refinance, before any monthly savings. |
If the new payment is not lower, there is no break-even. A shorter term can still cut the interest, and that shows up in the interest line rather than the monthly line.
The payment is the same reducing-balance formula as the loan EMI calculator.
Worked examples
Loading an example fills the tool and scrolls you back to the result. Money examples stay in US dollars on the page. The symbol you picked changes; the numbers do not convert.
The same loan, paid over 20 years instead
$280,000.00 at 6.75% for 324 months, refinanced at 5.5% for 240 months. Fees $4,500.00.
Payment $1,880.48 becomes $1,926.08. No monthly saving. Interest after fees $142,515.80.
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<iframe src="/embed/refinance-break-even-calculator" title="Refinance break-even" width="100%" height="720" style="border:0;max-width:42rem" loading="lazy"></iframe>Questions
Are the fees added to the new loan?
No. They are treated as cash you pay now. Rolling them in would raise the new balance and push the break-even further out.
What if I will move before the break-even month?
You have not covered the fees. The monthly saving only helps if you keep the new loan past that month.
Does a shorter new term always save money?
It can raise the payment and still cut the total interest. Read the interest line, not only the monthly difference.