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Mortgage Refinance Calculator

Compare your current mortgage with the refinanced one: monthly saving, break-even time and lifetime interest saved, to judge if refinancing pays off.

Input Data

Balance
HK$
Current Rate
%
Years Remaining
yr
New Rate
%
New Term Years
yr
Closing Costs
HK$

Results

The current monthly instalment.
HK$16,674.97
The monthly instalment after refinancing.
HK$13,471.34
Current payment minus new payment.
HK$3,203.63
Closing costs divided by the monthly saving.
6.2months
Total interest saved over the new term.
HK$132,808.6

At a glance:Refinancing replaces a mortgage with a new one, usually at a lower rate. The calculator compares the current and new monthly payments, the monthly saving, the break-even months (closing costs ÷ monthly saving) and the lifetime interest saved.

Formula

Current/new payment from standard amortisation of the balance at each rate.

Monthly saving = current payment − new payment.

Break-even months = closing costs ÷ monthly saving.

$$\text{PMT} = \dfrac{P \times r (1+r)^n}{(1+r)^n - 1}, \quad r = \dfrac{\text{annual rate}}{12}$$
$$\text{Break-even (months)} = \dfrac{\text{Closing Costs}}{\text{Monthly Savings}}$$

How to Use

  1. Enter the outstanding balance, current and new rates and terms.
  2. Enter the one-off refinance costs.
  3. Read the monthly saving, break-even time and lifetime interest saved.

FAQ

How should I read the break-even period?

The break-even period is the number of months it takes for the monthly saving to recover the refinance costs. If you keep the property and keep paying longer than the break-even, refinancing usually pays off; if you sell or pay off before it, you may lose money on the deal.

What should I check before refinancing?

Most important is the penalty period on your current mortgage (usually an early-repayment penalty in the first 2–3 years). Also compare banks' cash rebates, legal and valuation fees and mortgage insurance, and the new valuation, to compute the true refinance cost.

Why might the new payment be higher yet refinancing still make sense?

If the new mortgage extends the term, the monthly payment may not fall and could even rise; but if the goal is to cash out or ease immediate cash flow, it may still suit you. Whether it is worthwhile depends on the monthly saving, lifetime interest and your own cash-flow plan together.

What exactly is the 'penalty period' I must check before refinancing?

A penalty period is a clause in the mortgage contract that banks use to retain customers: if you fully repay the loan within it (including repaying it by switching to another bank), you must pay the original bank a penalty (clawback). In Hong Kong the penalty period is typically the first 2–3 years after drawdown, and the charge is commonly a percentage of the cash rebate already received, or a percentage of the loan, per your contract. The reason is that banks often offered a cash rebate to win the mortgage and expect you to pay for a while to recoup it; if you leave too early, the penalty recovers some cost. For an owner wanting to refinance, the penalty matters for two reasons: first, it is a real refinance cost that must enter the total 'closing costs' when computing the break-even — refinancing inside the penalty period can stretch the break-even so much that a good deal turns bad; second, even an attractive new rate may be offset by the penalty. The sensible approach is usually to wait until the penalty period ends (first 2–3 years) before refinancing, so the saved interest is pure gain. Before refinancing, check your contract or ask the original bank for the exact penalty period and amount, and include it with the legal and valuation fees in the cost.

If refinancing extends the term and lowers the payment, is it automatically better?

Not necessarily. Extending the term (e.g. from 25 years remaining to a fresh 30-year mortgage) does lower the monthly payment and eases immediate cash flow, but that does not mean it is better overall, because it may increase total interest. The reason: the lower payment comes partly from the lower rate (real interest saving) and partly from spreading the principal over more periods (merely deferring the burden, not saving interest) — the longer the term, the longer you pay interest, so at the same rate total interest actually rises. So judge refinancing not by 'did the monthly payment fall' alone, but by: first, the lifetime interest saved — this tool estimates the old remaining interest minus the new total interest minus costs, the true long-run benefit; second, your purpose — if the goal is lower immediate payment or cash-out, a slight rise in total interest may be acceptable if it fits your plan, but if the goal is saving interest, keep or shorten the term; third, a smart move is to grab the lower rate while keeping the original remaining term (or even shortening it), so the payment still falls from the rate cut without raising total interest, or keep the lower new payment and use the saving for prepayment. In short, a lower monthly payment is only one indicator — weigh it with lifetime interest and your own goals.

Related Tools

References

Content review: Calculatorism Finance Team. Results are for reference only; please refer to the relevant authorities for the official figures.

Found a problem with the results?

If this calculator's result is wrong, or you have any question about the calculation logic, please let us know. You are viewing:Mortgage Refinance Calculator（/finance/mortgage-refinance）。