Mortgage Recast Calculator
Enter your current balance, a lump-sum payment, your interest rate, and the years left on the loan. The calculator re-amortises the smaller balance over the same term to show your new monthly payment and the interest you save.
How to calculate mortgage recast
A recast keeps your interest rate and remaining term the same but re-amortises a smaller balance after you make a lump-sum payment. The calculator works out the standard monthly payment on your current balance, subtracts the lump sum, then works out the new payment on the reduced balance over the same number of months. The gap between the two is your monthly saving. Because the term does not change, recasting lowers the payment rather than shortening the loan.
M = P x r x (1 + r)^n / ((1 + r)^n - 1), where r = annual rate / 12 and n = months left
Worked example
You owe $250,000 at 6.5% with 25 years left and pay a $30,000 lump sum, then ask the lender to recast.
- Monthly rate: 6.5% / 12 = 0.5417%; months left: 25 x 12 = 300
- Current payment on $250,000: about $1,688 per month
- New balance: $250,000 - $30,000 = $220,000
- New payment on $220,000 over 300 months: about $1,485 per month
- Monthly saving: $1,688 - $1,485 = about $203
Result: Recasting drops the payment by about $203 a month while keeping the same payoff date.
Frequently asked questions
What is a mortgage recast?
A recast (or re-amortisation) is when you make a large lump-sum payment toward your principal and the lender recalculates your monthly payment over the remaining term at the same interest rate. Your rate and payoff date stay the same; only the monthly payment drops.
How is a recast different from a refinance?
A refinance replaces your loan with a new one, often at a different rate, with closing costs and a credit check. A recast keeps your existing loan and rate and usually costs only a small fee (often $150 to $500). Recasting cannot lower your interest rate, only your payment.
Does recasting save interest?
Yes, because the lump sum reduces the principal that interest is charged on, so you pay less total interest over the life of the loan. You save less than if you kept the original payment and shortened the term, but your required monthly payment falls.
Which loans can be recast?
Most conventional fixed-rate mortgages allow recasting, usually with a minimum lump sum (often $5,000 or more). FHA, VA, and USDA loans generally cannot be recast. Check with your servicer, as policies and minimums vary.