Mortgage Recast Calculator

How it works

A recast (also called re-amortization) is when you pay a lump sum toward principal and the lender recalculates your monthly payment so the smaller balance is repaid over the months left on the original term. Your rate and payoff date stay the same; your payment drops.

The calculator first finds where your loan stands today: the original payment from the loan amount, rate and term, and the balance after the payments you have already made. It then compares three paths from today: doing nothing, recasting after the lump sum, and paying the same lump sum but keeping your current payment so the loan ends early.

Keeping the payment always saves at least as much interest as recasting, because more money goes to principal every month. A recast trades some of that saving for a lower required payment and more monthly flexibility. The recast fee is subtracted from the recast path's saving; the keep-payment path needs no lender action and has no fee.

Formula

r = annual rate ÷ 12        n = years × 12        k = payments made
M  = paymentForLoan(P, r, n)                          current payment
B  = P × (1 + r)^k − M × ((1 + r)^k − 1) ÷ r          balance today
M' = paymentForLoan(B − L, r, n − k)                  recast payment
interest, no action = M × (n − k) − B
interest, recast    = M' × (n − k) − (B − L)
interest, keep M    = total of payments of M on (B − L) until paid − (B − L)
recast saving after fee = interest, no action − interest, recast − fee

Example

A $300,000 loan at 6.5% for 30 years has a payment of $1,896.20. After 60 payments the balance is $280,832.93. Paying a $50,000 lump sum and recasting over the remaining 300 months drops the payment to $1,558.60, a reduction of $337.60 a month.

Doing nothing, the remaining interest is $288,028.29. Recasting cuts it to $236,747.21, a saving of $51,281.07, or $51,031.07 after a $250 fee. Paying the same $50,000 but keeping the $1,896.20 payment pays the loan off in 200 months instead of 300 and cuts remaining interest to $147,222.02, a saving of $140,806.27.

Assumptions and limitations

• The rate is fixed and payments are monthly and made on time; the lump sum is applied right after the last payment you entered.
• The recast keeps the original maturity date. Not every loan can be recast and many servicers set a minimum lump sum; ask yours before relying on a recast.
• The recast fee is an amount you enter; $150 to $500 is a typical range from lender practice, not a regulated figure.
• Escrow for taxes and insurance, mortgage insurance and any prepayment penalty are not included.
• The comparison ignores what else the lump sum could earn if you invested it instead.
• Results are estimates for planning and are not financial, tax or legal advice. Confirm the new payment with your loan servicer.

Frequently asked questions