Mortgage Refinance
Should you refinance? Calculate break-even and total savings.
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๐ก Expert Tips
Refinancing makes sense if break-even is under 2 years.
Even 0.5% rate reduction can save lakhs.
How to read your result
The break-even point (months until refinancing costs are recovered through lower payments) is the key number here โ refinancing only makes sense if you plan to stay in the home (or keep the loan) longer than that break-even period, regardless of how attractive the new rate looks in isolation.
โ ๏ธ Common Mistakes
โ Refinancing purely because the new rate is lower, without checking the break-even timeline.
โ Closing costs and fees on a refinance take time to recoup through the lower payment โ if you might sell or pay off the loan before the break-even point, refinancing can actually cost more than it saves.
โ Not accounting for resetting the amortization schedule.
โ Refinancing typically restarts your loan term โ if you're already several years into the original loan, a new full-term refinance can mean paying interest for longer overall, even at a lower rate, unless you also shorten the new term.
Frequently Asked
When should I refinance?โพ
When the new rate saves enough to recover closing costs within 2 years.
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Mortgage Calculator
Example 1 โ Standard 30-year mortgage
Monthly payment โ โน36,700 ยท Total interest over 30 years โ โน82 lakh โ more than 1.6ร the loan amount