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Mortgage Recast Savings Calculator

Enter your balance, rate, remaining term and lump sum to see the new payment and savings.

How it is calculated

A recast keeps the interest rate and the remaining term and only re-spreads a smaller balance. The tool uses the standard payment formula PMT = P × i × (1 + i)n ÷ ((1 + i)n − 1) where i is the annual rate ÷ 12 as a decimal, n is remaining years × 12, and P is the balance. It computes the payment on the current balance, then on balance − lump sum (never below zero). The new payment is the second figure, the monthly drop is the difference, and the lifetime figure is the drop × n. That figure compares total remaining payments only; it does not subtract the lump sum you paid, so it overstates your net saving. A 0% rate is handled as a simple division. Taxes, insurance and any recast fee are not included.

Worked example

A balance of 300,000 at 6.5% with 25 years left. i = 0.065 ÷ 12 = 0.005417 and n = 300. Current payment = $2,025.62. After a 50,000 lump sum the balance is 250,000 and the new payment = $1,688.02. Monthly drop = 2,025.62 − 1,688.02 = $337.60. Lifetime figure = 337.60 × 300 = $101,281.07. Since 50,000 of that is the lump sum you handed over, the real saving in interest is about 101,281 − 50,000 = 51,281.

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Common mistakes

  • Taking the lifetime savings as pure profit. It includes the lump sum itself (50,000 in the example), so subtract the lump to see the interest actually saved.
  • Entering the original loan amount and original term. Use the current balance and the years remaining, because the recast starts from today.
  • Typing the rate as a decimal such as 0.065. The field is in percent, so enter 6.5.
  • Expecting a shorter loan. A recast keeps the same end date and lowers the payment; if you want to finish sooner, keep paying the old amount.
  • Forgetting lender conditions. Many lenders require a minimum lump sum or charge a fee, and not every loan type can be recast; the tool does not model either, so confirm with your lender.

Sources

About this calculator

A mortgage recast is different from a refinance: after you make a lump-sum payment toward principal, the lender simply re-amortizes the remaining balance over the same remaining term and at the same interest rate, which lowers your required monthly payment without a new loan, new rate, or new closing costs. This calculator computes your new payment after a chosen lump sum and shows the monthly savings compared to your current payment.

Homeowners who receive a windfall — an inheritance, a bonus, or proceeds from selling another property — use recasting to lower their monthly obligation while keeping their existing rate and term, and financial planners and mortgage loan officers use the same math to compare recasting against alternatives like refinancing or simply paying extra principal each month without recasting.

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Comments (1)

  • Editorial team

    A recast lowers the payment, not the end date. If your aim is to save interest, you can instead keep paying the old amount after the lump sum, which shortens the loan. Lenders that offer recasts often set a minimum lump sum and a fee, so ask yours. A recast is a US mortgage term; in Turkey, check whether your bank lets a part-payment cut the instalment or the term. What would you do with the freed-up monthly cash?

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