Refinance Calculator

Comparing the Loans on the Same Basis

A refinance calculator compares the cost of keeping your current loan with replacing it. Start with the same balance and remaining term so a lower repayment reflects the rate difference. Then change the replacement term to see what the extra years cost.

The starting home loan example has $500,000 remaining over 25 years. At 6.5%, the monthly repayment is $3,376.04. Replacing it at 6% over the same term lowers that repayment to $3,221.51, a reduction of $154.53.

The headline saving compares interest and fees over your chosen holding period. It accounts for the balance still owing, so paying less principal does not appear as a saving. The separate cash-outflow figure shows the effect on your budget.

Both schedules use the annual interest rate divided by 12, with interest and repayments rounded to cents each month. Actual daily-interest loans can produce different amounts. Optional extra repayments apply equally to both loans, and recurring fees stop when each loan is repaid.

Refinance Costs and Break-Even

Refinancing saves money over your holding period when the interest and fee reduction exceeds the net switching costs. Add exit and setup costs, then subtract the cashback you enter. The calculator compares cumulative costs month by month.

In the starting example, $500 of exit costs and $1,000 of setup costs produce $1,500 in net switching costs. With a $10 monthly fee on each loan, the comparison reaches break-even in month 8. Over 60 months, the net saving is $10,922.

Break-even here means savings remain at or above zero from that month through the selected horizon. A cashback can produce an early gain that later fees erase. If the comparison ends with a loss, the result says it does not break even within that horizon.

Include the actual fixed-rate break quote, discharge charges and new-loan costs. New lenders mortgage insurance can also change the result. Moneysmart's home loan switching guide explains these costs and why the replacement term matters.

A cashback is an entered assumption, not an eligibility result. The model treats it as received immediately. If payment comes later or depends on keeping the loan, the timing of actual cost recovery changes. Costs paid from the loan balance also accrue interest, which this separately-paid-cost model excludes.

Home, Car and Personal Loan Scenarios

The same comparison works for a home, car or personal loan when both options replace the same debt. Enter each rate and remaining term, add the fees and include any final balloon. A balloon lowers regular repayments but leaves a lump sum to pay at the end.

For example, a $12,000 car loan at 0% over one year has a $1,000 monthly repayment without a balloon. A $6,000 balloon lowers the regular repayment to $500, with $6,500 due in the final month. The calculator includes the final payment in the schedule rather than counting the deferred principal as savings.

For personal and business loan refinancing, use the contract's interest rate and monthly fee equivalent. The calculation does not assess tax deductions or irregular business cash flows. Moneysmart's personal loan comparison guidance explains how fees, terms and balloons affect total costs.

For an equity or cash-out refinance, first compare replacing the existing debt at the same balance. Extra borrowing is a separate funding decision and adds interest. This calculator does not estimate available equity, lender approval or the cost of borrowing a larger replacement amount.

The maths is the same in Melbourne, Albury and elsewhere in Australia. Location-specific registration charges belong in setup costs when they apply.

When a Lower Repayment Costs More

Extending the replacement term can reduce the monthly payment while increasing lifetime interest. Keep the starting inputs and change only the replacement term from 25 to 30 years to see this effect.

The 30-year replacement lowers the repayment by $378.29 a month but adds $66,384 in lifetime interest compared with the current loan. Those interest figures exclude fees and switching costs. Compare the lifetime saving after all costs as well as the saving over the years you expect to hold the loan.

A shorter holding period can still show a positive saving even when the longer term raises lifetime interest. Use the remaining balances to see the debt you carry beyond that period. Choose the term with its full cost and repayment commitment in view.