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Learn how to calculate mortgage recast savings with our free calculator and formula guide. Calculate new monthly payments, interest savings, and break-even analysis from lump sum payments. Reduce your mortgage payment without refinancing. Formula: PMT = P × [r(1+r)ⁿ] / [(1+r)ⁿ - 1]. Our calculator shows new monthly payments, total interest savings, break-even analysis, and mortgage optimization strategies to help you make informed financial decisions.
Last updated: February 2, 2026
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PMT = P × [r(1+r)ⁿ] / [(1+r)ⁿ - 1]
Use amortization formula with current balance:
PMT = P × [r(1+r)ⁿ] / [(1+r)ⁿ - 1]
Example: $300,000 × [0.00375(1.00375)^300] / [(1.00375)^300 - 1] = $1,665/month
Subtract lump sum payment from current balance:
New Balance = Current Balance - Lump Sum
Example: $300,000 - $50,000 = $250,000 new balance
Apply formula with new balance:
New PMT = New Balance × [r(1+r)ⁿ] / [(1+r)ⁿ - 1]
Example: $250,000 × [0.00375(1.00375)^300] / [(1.00375)^300 - 1] = $1,388/month
Subtract new payment from original:
Monthly Savings = Original PMT - New PMT
Example: $1,665 - $1,388 = $277/month savings
Calculate interest saved over remaining term:
Interest Saved = (Original PMT × n) - (New PMT × n) - Lump Sum
Example: ($1,665 × 300) - ($1,388 × 300) - $50,000 = $83,100 saved
Subtract recast fee from total savings:
Net Savings = Interest Saved - Recast Fee
Example: $83,100 - $250 = $82,850 net savings
Key Insight: Mortgage recasting reduces monthly payments while keeping your interest rate and loan term the same. The larger your lump sum payment and the higher your interest rate, the more you'll save. Most recasts break even within 1-2 months, making them a cost-effective way to reduce monthly payments without refinancing.
For a typical scenario ($300K balance, $50K lump sum, 4.5% rate, 25 years remaining):
$33,125 net savings over loan term
Our mortgage recast calculator uses standard amortization formulas to determine how a lump sum payment affects your mortgage. The calculation considers your current balance, interest rate, remaining term, and lender fees to provide accurate mortgage savings projections and help you evaluate this financial strategy.
PMT = P × [r(1+r)ⁿ] / [(1+r)ⁿ - 1]Where P = principal balance, r = monthly interest rate, n = number of payments
The calculator compares payments before and after the lump sum payment to determine savings. The formula calculates your new monthly payment based on the reduced principal balance, keeping the same interest rate and loan term.
Shows before/after payment comparison and interest savings timeline
The calculator performs comprehensive analysis including payment reduction calculations, total interest savings over the remaining loan term, recast fee impact, and break-even analysis to determine how long it takes for monthly savings to offset the recast fee.
Exploring other mortgage options? Check out our 401k loan calculator and borrowing power calculator.
Get Custom Calculator for Your BusinessResult: Save $277 monthly and $82,850 over the loan term with immediate break-even
This demonstrates how recasting can significantly reduce both monthly payments and total interest costs.
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