What is the break-even point in refinancing?

The break-even point is when your monthly savings from the new rate have covered the closing costs of refinancing. If you plan to stay in the home past that point, refinancing usually makes sense.

When does refinancing make sense?

Refinancing makes sense when the new rate is meaningfully lower, when you can shorten the term affordably, or when you need to cash out equity — and when you plan to keep the loan long enough to pass the break-even point.

Mortgage Refinance Calculator

Compare your current loan with the new offer.

Loan Comparison

Current Loan Balance ($)

Current Rate (% p.a.)

Current Remaining Term (years)

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New Rate (% p.a.)

New Loan Term (years)

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Closing Costs ($)

Monthly Savings

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Current Payment

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New Payment

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Break-even

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Total Interest Saved

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Understanding the break-even point

Refinancing costs money upfront (closing costs). The break-even point is the number of months it takes for your monthly savings to cover those costs. For example, with $50,000 in closing costs and $2,000 monthly savings, you break even after 25 months — so refinancing makes sense if you plan to stay longer than that.

Refinance Calculator FAQ

Is a rate cut of 1% worth refinancing?▶

A 1% rate cut on a large balance can save thousands in interest and reduce your payment meaningfully — but only if the break-even point is comfortably inside how long you plan to stay.

Should I refinance to a shorter term?▶

A shorter term usually raises the monthly payment but saves a large amount of interest and builds equity faster. Use this calculator to compare totals before deciding.