Refinance & Balance Transfer Calculator
A lower rate is not automatically a better deal. Weigh the saving against the switching cost and see how long you need to stay for the move to pay off.
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How it works
Refinancing replaces your existing loan with a new one, usually at a lower rate. The saving is real, but so is the cost: processing fees, valuation, legal work and sometimes an exit penalty on the loan you are leaving.
The number that decides it is the break-even point — the month at which the accumulated saving finally exceeds what the switch cost you. Move house or repay before that month and you have lost money, however attractive the new rate looked.
Break-even months = switching cost ÷ (current instalment − new instalment)
- Balance — what you currently owe, which becomes the new loan amount
- Switching cost — processing fee, legal and valuation charges, plus any exit penalty
- Break-even — the month the saving has repaid the switching cost
Worked example
A 250,000 balance at 8% with 18 years left, refinanced to 6.75% over 18 years for a 4,000 fee
Inputs
Results
Just under two years to break even. Sound if you are staying put, marginal if you expect to sell inside three.
Frequently asked questions
Should I extend the term when I refinance?
It lowers the monthly payment but usually raises the total interest, sometimes past what you were paying before. Keep the new term equal to your remaining term for a like-for-like comparison, then adjust if cash flow matters more than total cost.
What counts as the switching cost?
Everything you pay to make the move: the new lender’s processing or origination fee, valuation and legal charges, stamp duty where it applies, and any prepayment penalty charged by your existing lender.
Why is my net saving lower than the monthly saving suggests?
Because the switching cost is deducted, and because a refinance restarts the amortisation clock. Early payments on the new loan are interest-heavy again, which eats into the headline gain.
Is my data sent anywhere?
No. The calculation runs entirely in your browser. Nothing you type is transmitted to us or stored.
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