Compare fixed repayments against current market rates accurately. See discount factors, savings, and break estimates. Make informed refinancing decisions using structured cost inputs today.
| Loan Balance | Original Rate | Current Rate | Remaining Term | Payments/Year | Repayment Type | Indicative Outcome |
|---|---|---|---|---|---|---|
| $250,000.00 | 6.2000% | 4.8000% | 2.50 years | 12 | Amortizing | Break cost rises when market rates fall. |
| $180,000.00 | 5.9000% | 5.1000% | 1.75 years | 12 | Interest Only | Smaller rate gap often lowers the estimate. |
| $420,000.00 | 7.1000% | 4.9000% | 3.00 years | 12 | Amortizing | Longer remaining terms can increase the cost. |
Core idea: break cost is estimated from the present value of the difference between the original fixed-rate interest cash flows and replacement market-rate cash flows.
Periodic interest: Opening Balance × Annual Rate ÷ Payments Per Year.
Amortizing payment: Payment = P × r ÷ (1 − (1 + r)−n).
Cash flow difference: Original Interest − Market Interest.
Present value: Cash Flow Difference ÷ (1 + Market Period Rate)Period.
Gross break cost: Sum of discounted differences.
Estimated amount payable: Gross Break Cost + Accrued Interest + Fees, floored at zero.
This method is an estimate. Actual lender calculations may use swap curves, internal funding rates, or contractual break clauses.
A fixed interest break cost can affect refinancing decisions. It matters in accounting, cash flow planning, and debt strategy. A borrower may expect a savings gain after leaving a fixed contract early. That assumption is not always correct. The lender may lose expected interest income. The lender can recover that loss through a break fee or a discounted differential charge.
This calculator compares two streams of interest. The first stream uses the contract fixed rate. The second stream uses a current market rate for the same remaining term. The difference between those cash flows is then discounted back to today. That present value approach gives a practical estimate of the lender’s financial loss or gain. Extra fees and accrued interest are then added to produce a payable estimate.
Three variables usually drive the result. The first is the rate gap. If market rates fall below the fixed contract rate, the break cost often rises. The second is the remaining fixed term. More time means more periods to discount. The third is the loan balance. A larger balance can create larger cash flow differences. Repayment type also matters. Interest-only structures often behave differently from amortizing loans because the balance declines more slowly.
Accounting teams use these estimates during refinancing reviews, liability management, and budgeting. Treasury staff may compare the expected break charge against future interest savings. Controllers may also test how fees influence the net result. This helps when preparing forecasts, board papers, or lender discussions. The model is useful for planning, but it is still an estimate. Actual contracts can include funding curve adjustments, minimum charges, and legal terms. Always compare this result with the lender’s formal payout statement before making a final decision.
It is the estimated cost of ending a fixed-rate loan before the agreed maturity date. The lender may charge for the loss created by changed market rates.
When rates fall, the lender may reinvest returned funds at a lower rate. That can reduce expected income. The break cost often reflects that loss.
Yes. If the discounted differential plus fees and accrued interest is negative, this calculator floors the payable result at zero for a practical borrower estimate.
Yes. Choose interest-only as the repayment type. The calculator then keeps the balance constant across the remaining fixed term and discounts the interest difference.
Amortizing loans reduce principal over time. That changes each period’s interest amount. Lower later balances can reduce the total discounted difference.
No. Lenders may use internal funding curves, contract clauses, minimum charges, and settlement adjustments. This tool is best used for planning and review.
Use a current rate that matches the remaining fixed period as closely as possible. Better matching improves the usefulness of the estimate.
Yes. After calculating, use the CSV button for spreadsheet work or the PDF button to save a print-ready version of the result.
Important Note: All the Calculators listed in this site are for educational purpose only and we do not guarentee the accuracy of results. Please do consult with other sources as well.