METHOD
Formula and method
Savings = remaining old repayments − all new repayments − switching costs.
Loan refinancing: is switching to a lower rate worth it?
Compare remaining repayments against a replacement loan and switching costs.
01
Your inputs
Starting values are an example. Replace them with your own.
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02
Your result
Enter your details and run the calculation.
About this result
Informational calculations. Check assumptions, dates and jurisdiction before making a decision.
Full disclaimerWhen does refinancing a loan pay off?
The calculator works out the old loan payment for the outstanding principal and remaining months, and the new loan payment for the same principal at the new rate and term. The saving is the difference between all remaining old payments and all new payments, minus switching costs such as bank and processing fees. A longer new term can lower the payment and still raise the total cost, so check both results. The result is an illustrative scenario, not a bank offer.
TRACEABLE
Sources and validity
Basic arithmetic or geometry using the formula shown. Uses only your inputs.
How we maintain data