Mortgage Points Calculator
Cost and rate reduction from paying points.
Calculate cost of mortgage points and resulting monthly payment reduction. Enter loan amount and points paid to see upfront cost and monthly saving.
What this tool does
Enter loan amount, points paid, rate reduction per point, and term. The tool shows upfront cost and monthly saving.
Enter Values
Formula Used
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Disclaimer
Results are estimates for educational purposes only. They do not constitute financial advice. Consult a qualified professional before making financial decisions.
Paying 2 points on a 250,000 loan = 5,000 upfront. If each point reduces the rate by 0.25%, rate drops 0.5%. On a 25-year loan, that typically saves about 70/month. Break-even: 71 months. Only worth it if you plan to stay past break-even.
Run it with sensible defaults
Using loan amount of 250,000, points paid of 2, rate reduction per point of 0.25%, base rate of 5%, the calculation works out to 5,000.00. Nudge the inputs toward your own situation and the output recalculates instantly. The defaults are meant as a starting point, not a recommendation.
The levers in this calculation
The inputs — Loan Amount, Points Paid, Rate Reduction per Point, Base Rate, and Term — do not pull with equal force. Not every input has equal weight. Flip one at a time toward extreme values to feel which ones move the needle most for your situation.
How the math works
Each point = 1% of loan amount. Rate reduction = points × per-point reduction. Monthly saving computed from base vs new rate amortisation. The working is transparent — you can verify every step yourself in the formula section below. No black box, no opaque "proprietary model".
Why this matters before you sign
A mortgage is usually the biggest single financial commitment a person makes. The difference between a well-chosen product and a hasty one can run into tens of thousands over the life of the loan. Running the numbers here before committing is the cheapest form of due diligence available.
What this doesn't capture
The figure excludes arrangement fees, valuation costs, legal fees, insurance, and any early-repayment charges — those can add several thousand to the headline cost. Rate changes at renewal for fixed-term deals will shift the picture further. Use this for the core interest/principal math and add the other costs on top.
Mortgage points produces a cost and saving based on the inputs provided.
Inputs
This example uses typical values for illustration. Adjust the inputs above to match a specific situation and see how the result changes.
Sources & Methodology
Methodology
Each point = 1% of loan amount. Rate reduction = points × per-point reduction. Monthly saving computed from base vs new rate amortisation.
References
Frequently Asked Questions
Typical per-point reduction?
Are points tax-deductible?
Better to invest points money instead?
Can I buy fractional points?
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