Mortgage Recast Calculator

The Core Formula

When you recast a mortgage, your lender takes your new lower balance and runs the standard amortization formula using your original interest rate and the remaining number of months on your loan:

Monthly Payment = Balance × [r × (1 + r)^n] / [(1 + r)^n − 1]

Where r is the monthly interest rate (annual rate ÷ 12) and n is the number of months remaining. The only thing that changes is Balance — after your lump sum is applied, the balance drops, so the monthly payment drops proportionally.

Interest Savings

Because the recast keeps the same remaining term, you can calculate the exact total interest saved without running a full amortization loop:

Interest Saved = Monthly Reduction × Remaining Months − Lump Sum

The lump sum is subtracted because that principal was always going to get repaid eventually — the savings come solely from the interest that no longer accrues on the portion you paid off early.

Break-Even

The break-even period tells you how many months it takes for your cumulative monthly savings to exceed the one-time recast fee:

Break-Even Months = Recast Fee ÷ Monthly Reduction

Typical recast fees ($150–$500) break even within a few months when the monthly reduction is meaningful. After break-even, every month of reduced payments is pure net savings.

What the Chart Shows

The comparison chart plots your monthly P&I and total lifetime interest side by side — before and after the recast. The difference between the two "Total Interest" bars is the amount you save by applying the lump sum now rather than waiting for it to reduce through normal amortization.

1. After Selling a Previous Home

One of the most common recast scenarios: you sell your old house and receive a large net proceed, but you've already closed on the new home with a bridge loan or concurrent purchase. Once the sale closes, you can apply the proceeds as a lump-sum recast payment and immediately lower your monthly obligation on the new mortgage.

2. Receiving a Windfall

Bonuses, inheritance, stock vesting, or business distributions can all fund a recast. Before parking the cash in a savings account, run this calculator to compare the guaranteed, tax-free return of reduced interest against the yield you'd earn keeping the funds liquid.

3. Reducing Obligations Before a Life Change

If you're planning to reduce your work hours, transition careers, or retire early, lowering your required monthly housing payment improves cash-flow resilience. A recast delivers a permanent payment reduction without changing your rate or term — unlike refinancing, which resets your amortization clock and may extend your payoff date.

4. When You've Already Got a Great Rate

If you locked in a low rate and rates have since risen, refinancing would trade your favorable rate for a worse one. A recast preserves your rate while still converting a lump sum into a lower payment — the best of both worlds when current market rates aren't competitive with what you already have.

5. Comparing Recast vs. Extra Payments

Use this calculator alongside the Mortgage Payoff with Extra Payments calculator to compare two strategies:

• Recast: permanently lowers required payment, same payoff date
• Extra payments without recast: same required payment, earlier payoff date

The right choice depends on whether you prioritize monthly cash flow or a faster payoff.