When to use this calculator
Find how long monthly payment savings take to recover refinancing costs. Simple cash-flow break-even ignores term changes, balance differences, tax and opportunity cost.
Explore the loan & repayment calculators for other questions in this topic. For a related calculation, use the Budget Surplus Calculator: Find money left after entered expenses for a matching income period.
PUTTING IT INTO PRACTICE
Refinance Break Even: a worked example
The values below are an illustrative example, not a recommendation. Replace them with measurements or assumptions that match your question.
| Input | Example value |
|---|---|
| Refinancing cost | 3,000 |
| Old monthly payment | 1,200 |
| New monthly payment | 1,100 |
| Result | 30 months |
- Check the input labels and enter the example values above.
- Apply the relationship: Break-even months = refinancing cost/(old payment − new payment).
- The result is 30 months, rounded for display.
How to interpret your result
Simple cash-flow break-even ignores term changes, balance differences, tax and opportunity cost.
Use a fixed-rate amortising model for loans repaid by equal monthly instalments. An interest-only payment leaves the principal outstanding. Fees and contractual APR calculations require more than the interest rate alone.
Frequently asked questions
Does a lower monthly payment mean a cheaper loan?
Not necessarily. Extending the term can lower payments while increasing total interest. Compare both monthly affordability and overall cost.
When is the refinance break even calculator useful?
Find how long monthly payment savings take to recover refinancing costs. Simple cash-flow break-even ignores term changes, balance differences, tax and opportunity cost.
How do I use the refinance break even calculator?
Enter refinancing cost, old monthly payment, new monthly payment. The result updates automatically. Use the units shown beside each input; the example values illustrate the method.
Which formula does this calculator use?
Break-even months = refinancing cost/(old payment − new payment).
What should I check before using the result?
Simple cash-flow break-even ignores term changes, balance differences, tax and opportunity cost.
How are results rounded?
Scalar numbers display up to six decimal places, with scientific notation for very large or small values. Text, fraction, date and schedule outputs use the format described on the tool. Intermediate calculations use JavaScript floating-point arithmetic. Keep sensible precision for your measurements.
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