Refinance Calculator
Refinancing — replacing an existing loan with a new one, usually at a different rate — can genuinely save money, but only once fees, term length and the full comparison are properly accounted for, not just the headline rate difference. This calculator compares your current loan against a specific refinance offer side by side, working out the monthly saving, total saving, and how long it takes the new deal to break even against any fees involved.
Refinance Calculator
Compare your current loan or mortgage against a refinanced deal — see monthly and total savings.
The Silent Trap: Refinancing Into a Longer Term
This calculator lets you set the new loan’s term independently from your current one, and this matters more than it might first appear — refinancing into a longer term than you have remaining on your current loan can produce a genuinely lower monthly payment while quietly increasing the total amount repaid over the life of the loan, even at a meaningfully lower rate. This is not automatically a bad decision — a lower monthly payment can be exactly what is needed in some circumstances — but it is worth seeing this trade-off explicitly rather than assuming a lower monthly payment and a lower rate both moving in the same direction automatically means an unambiguously better deal.
The single most reliable safeguard against this specific trap is simply keeping the new term equal to, or shorter than, your genuinely remaining term whenever the priority is minimising total cost rather than easing monthly cash flow — checking both figures together, as this calculator does, removes the need to guess which effect is likely to dominate for any specific combination of numbers.
Seeing the Trap in Real Numbers
A £15,000 loan with 4 years remaining at 9.9% costs roughly £380 a month. Refinancing to 7.9% but stretched over 6 years instead of the remaining 4 drops the payment to roughly £262 a month — a genuine £117 a month saving, and with a £250 fee, that break-even arrives in barely two months. Yet the total repaid over the full new term comes to roughly £19,133, compared with £18,227 on the original loan — a total cost roughly £907 higher, purely from the two extra years added to the term. The monthly figure looks like an unambiguous win; the total figure tells a genuinely different story.
The Break-Even Point Is About the Fee, Not the Rate
The break-even figure this calculator shows answers one specific, narrow question: how many months of monthly saving does it take to recover any fees involved in refinancing. This is a genuinely useful, distinct number from the total saving figure — a refinance with fees but a strong monthly saving can break even quickly and still be worthwhile even if you do not keep the loan for its entire remaining term, while a refinance with a smaller monthly saving needs to be kept considerably longer before the fees are genuinely recovered. Checking this figure against how long you actually expect to keep the loan, rather than assuming you will automatically hold it to the end, is precisely the point of calculating it separately.
Why This Works for Any Loan, Not Just a Mortgage
Unlike calculators built specifically around mortgage mechanics such as LTV bands, this calculator works from balance, rate and term alone, making it equally useful for refinancing a mortgage, a car loan, a personal loan, or any other fixed-term borrowing where a lower rate might genuinely be available. If you are specifically refinancing a mortgage and want to see how sensitive your payment is to different possible rates before committing to a specific new deal, our Mortgage Rate Calculator is built around exactly that rate-sensitivity comparison. For a broader look at all the ways to reduce an existing loan’s cost — not just refinancing, but also overpaying or adjusting the term on your current loan — our Cut Your Loan Costs Calculator covers those additional options alongside refinancing.
Total Saving Can Say Yes When Monthly Saving Says No
It is genuinely possible for the monthly saving and the total saving to point in different directions, particularly once fees and a different term length are involved — a refinance with fees and only a modest monthly saving can still produce a meaningful negative total saving if the new term is considerably longer, even though the monthly figure alone looks like an improvement. This is exactly why this calculator shows both figures rather than just one: a real refinancing decision genuinely benefits from seeing the immediate cash-flow effect and the full-term cost effect together, since either one viewed alone can tell an incomplete story.
Frequently Asked Questions
Should I include an early repayment charge from my current loan?
Yes — if your current loan has an early repayment charge for switching before the end of its term, this is a genuine cost of refinancing and should be added to the fees figure, since leaving it out would understate the true cost of switching.
Does a lower APR always mean a genuinely better deal?
Not automatically — the APR is a useful starting comparison, but the actual saving depends on the specific balance, term and any fees involved, all of which this calculator brings together into a single, more complete comparison than the APR alone provides.
Is it worth refinancing for a relatively small rate improvement?
This depends heavily on your remaining balance and term — a modest rate improvement on a large balance over a long remaining term can still produce a meaningful total saving, while the same modest improvement on a small balance or short remaining term may not be worth any associated fees or effort involved.
Can I refinance more than once?
There is generally no limit to how many times you can refinance a loan, provided you qualify for a new deal each time, though it is worth weighing the fees and effort of each individual refinance against the genuine saving it would produce rather than refinancing purely out of habit.
Does my credit score affect the rate I would be offered when refinancing?
Yes — a new refinance application is generally assessed on your current credit profile, which may be meaningfully different from when you took out the original loan, for better or worse, so the rate you are actually offered may differ from the general market rate you were comparing against.
Important Information
This calculator provides an estimate based on the figures you enter and does not constitute financial advice or a loan offer. Actual rates and terms depend on individual lender assessment. For advice specific to your circumstances, consult a qualified financial adviser. See our Disclaimer for further information.