Recasting a Loan Calculator
Formula Used
Monthly rate: r = annual rate / 12
Remaining months: n = remaining years × 12 + extra months
Recast balance: B = current balance - principal curtailment + financed fee
Monthly payment: Payment = B × [r(1+r)^n] / [(1+r)^n - 1]
Zero interest case: Payment = B / n
Interest savings: old remaining interest - recast remaining interest
Net savings: interest savings - fee paid out of pocket
How to Use This Calculator
- Enter the current loan balance, annual rate, and remaining term.
- Add the current payment, or leave it zero for an estimate.
- Enter the lump-sum principal payment used for the recast.
- Add any lender recast fee and choose how the fee is handled.
- Add optional extra monthly payment after the recast.
- Press calculate to see payment, savings, payoff, and chart results.
- Use CSV or PDF downloads to save the scenario.
Example Data Table
| Scenario | Current Balance | Rate | Remaining Term | Lump Sum | Fee |
|---|---|---|---|---|---|
| Conservative recast | $250,000 | 6.25% | 24 years | $50,000 | $250 |
| Large curtailment | $380,000 | 5.90% | 27 years | $100,000 | $300 |
| Extra after recast | $185,000 | 4.75% | 18 years | $25,000 | $200 |
What Is Loan Recasting?
Loan recasting is a payment reset after you pay a large amount toward principal. The lender keeps the same interest rate and final maturity date. Then it recalculates the monthly payment from the smaller remaining balance. This can lower required cash outflow without creating a new loan. It is different from refinancing. Recasting usually has no new credit term, no new market rate, and fewer closing steps.
Why Recasting Matters
A recast can help when you receive a bonus, sell another property, or build extra savings. The lump sum cuts principal immediately. The new payment spreads the reduced balance across the remaining term. That means the payment may drop while the payoff date stays similar. The biggest benefit is flexibility. You keep the loan structure, yet improve monthly breathing room.
How This Tool Helps
This calculator compares the current schedule with a recast schedule. It estimates the current payment when one is not entered. It also lets you include a recast fee, extra payment, and remaining term. The results show the new payment, monthly reduction, total interest savings, payoff change, and net savings after fees. The graph shows how balances decline under both paths.
Planning Tips
Use realistic inputs before making a decision. Ask your lender about minimum curtailment rules, fees, and processing time. Some lenders require the loan to be current. Others may limit recasting to conventional mortgages. Compare a recast with simply making extra payments. Extra payments may save more interest. Recasting may improve monthly cash flow more. The best choice depends on your goals, emergency fund, and expected income.
Common Decision Points
Think about payment relief first. A recast is useful when a lower required payment protects your budget. Think about interest savings second. Paying principal always helps, but recasting may not shorten the loan by itself. If your main target is faster payoff, keep paying extra after the recast. This calculator includes that option, so you can test both outcomes. Save each result, compare the CSV, and review the numbers with your lender.
Small changes can matter over many months. Recheck the plan whenever your balance, rate, or household income changes again.
FAQs
What is a loan recast?
A loan recast recalculates your monthly payment after a large principal payment. The rate and maturity date usually stay the same. The new payment is based on the lower remaining balance.
Is recasting the same as refinancing?
No. Refinancing replaces the loan with a new one. Recasting usually keeps the same loan, rate, and payoff date. It mainly changes the required monthly payment.
Does a recast reduce interest?
Yes, the lump-sum principal payment can reduce future interest. The recast itself mainly lowers the payment. Paying extra after recasting can create larger interest savings.
Will the loan term change?
Usually no. A standard recast keeps the original maturity date. The calculator also shows payoff changes when you add extra monthly payments after the recast.
What inputs do I need?
You need the current balance, interest rate, remaining term, current payment, lump-sum payment, and any recast fee. The current payment can be estimated if left blank.
Can every loan be recast?
No. Lender rules vary. Some loans are eligible, while others are not. Ask your lender about minimum principal reductions, fees, waiting periods, and loan type limits.
Why include an extra payment option?
Some borrowers recast for payment relief but still pay extra later. This option shows whether extra payments shorten payoff time and improve total interest savings.
Should I recast or pay extra only?
Recasting may improve cash flow. Extra-only payments may save more interest if you keep the payment high. Compare both choices before sending a large principal payment.