Refinance calculator

What a rate cut is worth

On a $550,000 balance with 25 years remaining, from 6.4%, after $1,000 switching costs:

Same tested engine as the calculator. Even a quarter-percent pays for the switch inside a year on a balance this size.

The switching-cost checklist

• Discharge fee — the old lender's exit paperwork, commonly $275–$400.
• Government fees — mortgage discharge + registration at your state's land registry, roughly $120–$230 combined in most states.
• New-lender fees — application/settlement, $0–$800; frequently waived, and standard valuations are usually free. Ask.
• Fixed-rate break costs — only if you're leaving a fixed loan early; can be enormous when rates have fallen since you fixed. Get the payout figure in writing first.
• LMI, again — if your equity is under 20%, the new lender charges its own lenders mortgage insurance; the premium you already paid doesn't transfer. This alone can sink an otherwise good switch.

Before you switch for a better rate, it's worth one phone call: ask your current lender's retention team to match it. They often do, and the switching costs drop to zero.

Break-even, done properly

The arithmetic is one line — switching costs divided by monthly saving. On the example above, $1,000 of costs against $235.86 a month breaks even in about 5 months; every month after that is pure saving. But the line misleads in three situations. If you're likely to sell within the break-even window, the switch never pays for itself. If you're on a fixed rate, the break cost belongs in the costs figure — and it can turn seven months into seven years. And if your equity is under 20%, a fresh LMI premium at the new lender is a switching cost too, usually the biggest one on the list. Feed the real numbers into the calculator above and let the break-even speak for itself.

Cash-back offers, priced against the rate

Lenders periodically dangle $2,000–$4,000 cash-backs at refinancers, usually attached to a rate that isn't their sharpest. Here's the comparison that matters: on a $550,000 balance, a rate just 0.20% lower is worth $68.15 a month — so a $3,000 cash-back beats the sharper rate only for about 44 months, and after that the lower rate wins every month, forever. Cash-backs suit people who genuinely re-shop every couple of years; if you're likely to set and forget, take the rate. And remember the "loyalty tax": lenders' back-book rates drift above their new-customer rates by 0.3–0.5% within a few years, which is precisely why the retention-team phone call works.