Mortgage Recast Calculator
Estimate the new principal-and-interest payment after a lump-sum principal reduction while keeping the same rate and payoff date.
How this mortgage recast calculator works
A mortgage recast applies a lump-sum payment to principal and then calculates a new payment over the loan’s existing remaining term at the existing interest rate. This is different from refinancing, which replaces the loan, and different from making extra principal payments while keeping the old payment.
Mortgage recast formula
New principal = current balance − lump-sum payment. Monthly rate = annual rate ÷ 12. With n payments remaining, the new principal-and-interest payment is:
Payment = P × r × (1 + r)n ÷ [(1 + r)n − 1]
When the interest rate is zero, payment = principal ÷ remaining months. The calculator keeps the rate and payoff date unchanged, then compares the recast with the original schedule and with applying the lump sum while keeping the old calculated payment.
Worked example
For a $300,000 balance at 6.5% with 25 years remaining, the calculated principal-and-interest payment is about $2,025. A $50,000 principal payment leaves $250,000 to reamortize and reduces the modeled payment to about $1,688. The exact interest and fee comparisons appear above.
What the results mean
- Monthly payment reduction compares two calculated principal-and-interest payments using the same rate and remaining term.
- Gross interest reduction comes from reducing principal earlier. The recast fee is subtracted separately.
- Fee break-even divides the recast fee by monthly payment relief. It is not an investment-return calculation.
- Keep old payment shows the faster-payoff alternative after the same lump sum. It usually saves more interest than lowering the payment.
Important limits
This is a planning estimate, not a lender quote or financial advice. It assumes a fixed rate, monthly compounding, no future extra payments and a lump sum applied immediately before reamortization. It excludes escrow, property tax, insurance, mortgage insurance, late fees, prepayment penalties, adjustable-rate changes, daily-interest timing and lender-specific rounding. Some loans cannot be recast, and lenders may impose eligibility rules, minimum principal reductions, seasoning periods or different fees. Confirm the new payment and effective date with the loan servicer before sending funds.
Related calculators
- Mortgage Payoff Calculator — compare monthly, annual and one-time extra principal payments.
- Mortgage Refinance Calculator — compare a replacement rate, term, closing costs and break-even.
- Mortgage Affordability Calculator — estimate a home price from income, debts and housing costs.
Frequently asked questions
Does a mortgage recast change the interest rate?
The calculator assumes no rate change. A recast reamortizes the reduced principal over the existing remaining term. A refinance is the tool used to replace the loan and potentially change the rate or term.
Is the lump sum a cost in the savings comparison?
No. It is principal that would otherwise remain owed, paid earlier. The model compares future interest and the entered recast fee; it does not treat repayment of principal as interest expense.
Why can keeping the old payment save more interest?
After the lump sum, keeping the higher payment pays the smaller balance off sooner. Recasting trades some of that accelerated payoff for a lower required monthly payment.