Rolling costs sneaks into the clock
If you roll fees into the loan, the “cost” you’re recouping is higher and the payment drops less—so break-even can jump by months without you feeling a bigger cash outlay.
Hidden stretch
Refinance Break-Even Calculator
Inputs
Used to display the calendar month you break even.
If your current lender charges a fee to pay off early.
Current (old) loan
New (refinance) loan
Results
Monthly payment (P&I)
Old payment—
New payment—
Monthly savings—
Costs and break-even
Total refi costs (incl. points & penalty)—
Break-even point—
Break-even month—
If savings are negative or zero, there’s no break-even.
Interest over your hold period
Old loan interest (hold period)—
New loan interest (hold period)—
Interest difference—
Comparison runs for the number of years you said you’ll keep the new loan.
Inputs echo
Balance: — • Old rate: — • Old term left: —
New rate: — • New term: — • Costs: —
How the Refinance Break-Even Math Works
“Break-even” asks a simple question: how many months of lower payments does it take to earn back what you’ll spend to refinance? The core ingredients are (1) your current loan’s monthly principal-and-interest (P&I) payment, (2) the new loan’s P&I payment, and (3) all costs tied to refinancing—closing costs, discount points, and any prepayment penalty on your old loan.
This calculator computes your old payment using your remaining balance, interest rate, and time left. For the new payment, it uses the new rate and term. If you roll closing costs and points into the new loan, your principal is higher, so the new payment increases slightly; paying costs upfront leaves the new loan smaller, typically shortening the break-even.
The break-even in months is total refinance costs ÷ monthly savings. If your monthly savings are £0 or negative, there’s no break-even. A lower rate with a much longer term can still reduce the payment but might increase total interest over the years you’ll actually keep the loan. That’s why this tool also estimates interest paid over your chosen “hold period” (for example, 5–10 years) for both the old and new loans, so you can see the bigger picture beyond the monthly bill.
Keep in mind that taxes and insurance are usually escrow items and don’t change just because the interest rate changes. Fees vary by lender and region; discount points “buy down” the rate but add upfront cost. A prepayment penalty on the old loan, if applicable, should be added to the cost side. If you plan to move or refinance again soon, a long break-even horizon can make a refinance less compelling even if the payment drops.
Tips: Compare scenarios by toggling “roll costs” on/off; try a shorter new term to cut total interest; and pick a realistic hold period for your plans. This tool is educational—not advice—and ignores taxes and itemized deductions, which can affect your after-tax cost of borrowing.
5 Fun Facts about Refi Break-Evens
Points need time to shine
Buying 1 point for a tiny rate cut might take 4–8 years of payments to pay back. If you’ll move sooner, that shiny APR badge may never cross break-even.
Slow payback
Payment drops can mask more interest
Resetting to a fresh 30-year term usually drops the payment, but over a 7–10 year hold you can still pay more interest than sticking with the old higher payment.
Long tail
The clock restarts on refi #2
Refinancing again before you hit the first break-even means the original costs are never recovered; your new refi starts a brand-new clock.
Reset risk
Calendar month math can surprise you
Closing early in a month can add prepaid interest to costs; closing late can trim it. The exact day you sign nudges the break-even date on the calendar.
Timing quirk