Mortgage Refinance Calculator
Monthly savings from refinancing your mortgage.
Calculate monthly savings and total interest reduction from refinancing your mortgage to a lower rate, including arrangement fees.
What this tool does
This calculator estimates your new monthly payment and the total amount you could save by refinancing your mortgage at a different interest rate. Enter your current loan balance, your existing rate, the new rate you're being offered, and how many years remain on your mortgage. The tool applies standard amortisation mathematics to compute what your monthly payment would become under the new terms, then shows the difference between your current and new payment amounts carried across the remaining loan period. The result illustrates the financial impact of the rate change alone and assumes no changes to the loan term, additional fees, or other borrowing costs. Use this to compare refinance offers or model how rate movements affect your repayment schedule. The output is for illustration purposes and reflects the simplified scenario you enter.
Enter Values
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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.
Mortgage refinancing to a lower rate produces immediate monthly savings. 200,000 balance at 6% vs 4% over 20 years: the monthly payment drops about 221 (1,433 vs 1,212). Total interest saved over the remaining term: about 53,000. Potentially useful if rate difference exceeds 0.5-1% and you stay in home long enough to recover any fees.
A worked example
With the defaults: current balance of 200,000, current rate of 6%, new rate of 4%, remaining term of 20. The tool returns 220.90. You can adjust any input and the result updates as you type — no submit button, no reload. That's the real power here: seeing how sensitive the output is to one or two assumptions.
What moves the number most
The result responds to Current Balance, Current Rate, New Rate, and Remaining Term. Not every input has equal weight. Adjusting one input at a time toward extreme values shows which ones move the result most.
The formula behind this
Standard amortisation. Monthly payment = P × (r × (1+r)^n) / ((1+r)^n - 1). Saving = old - new. Everything the calculator does is shown in the formula box below, so you can check the math against your own spreadsheet if you want.
Why this matters
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. Modelling the numbers ahead of a decision shows how sensitive the outcome is to the rate and structure chosen.
What this doesn't capture
The figure shown reflects the core calculation; additional costs such as arrangement fees, valuation, legal fees, insurance, and any early-repayment charges (where applicable) sit on top and can add materially to the total cost of borrowing. Rates and product terms can also change over the life of the loan, which can shift the picture relative to this fixed-snapshot estimate.
Refinancing your £200,000 mortgage from 6% to 4% over 20 years yields $220.90 in monthly savings.
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
This calculator computes monthly savings from refinancing using standard amortisation logic. It calculates the current monthly payment based on your outstanding balance, current interest rate, and remaining loan term using the standard amortisation formula. It then recalculates the monthly payment using the new interest rate and the same outstanding balance and term. The saving is the difference between the old monthly payment and the new monthly payment. The model assumes a fixed interest rate throughout the remaining term, treats the loan as a simple amortisation with no prepayment, and does not account for refinancing costs, fees, changes in term length, or taxes. Results represent the monthly payment difference only and do not forecast actual savings or account for how payment changes may affect long-term financial position.
References
Frequently Asked Questions
How much rate cut justifies refinancing?
What about fees?
Can I refinance multiple times?
Extend term?
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