How to Use a Refinance Calculator
How do I use a refinance calculator to work out whether switching loans will save me money?
By Andrew, franklenn FINANCE 6 min readUpdated 3 November 2026
The short answer
To use a refinance calculator, enter your current loan balance, interest rate and remaining term, then the new rate, new term and switching costs. The calculator shows the change in repayments, the interest saved over the loan and how long it takes to recover your costs. The most important step is keeping the loan term the same when comparing, because stretching back to 30 years can make repayments look lower while costing more interest overall. Treat the result as an estimate, not a quote.
Detailed explanation
The inputs you'll need
Grab your latest home loan statement before you start. The more accurate your inputs, the more useful the result.
If you hold money in an offset account, note that too. Some calculators let you enter an offset balance, which changes the interest calculation and can make a loan with a slightly higher rate but a full offset the better choice.
- Current loan balance, not the original amount you borrowed.
- Current interest rate, as shown on your statement or online banking.
- Remaining loan term in years.
- The new rate you've been offered or are considering.
- The new loan term.
- Switching costs: discharge fees, government registration fees, and any application, valuation or break costs.
- Any cashback offered by the new lender.
Reading the results
Most calculators show three main outputs: the new monthly repayment, the total interest over the remaining life of the loan, and a break-even point. The break-even point tells you how many months of savings it takes to recover the switching costs.
Look at total interest, not just the monthly figure. A lower monthly repayment can hide a more expensive loan if the term has been extended.
Pay attention to whether the calculator includes fees in the comparison. Some only compare repayments and ignore switching costs entirely, which can make a marginal switch look better than it is. Others include ongoing fees, such as annual package fees, which can add up over many years.
The loan term trap
This is the most common source of confusion. If you have 24 years left and the calculator, or a new lender, defaults to a 30-year term, your repayments drop for two reasons: the lower rate and the extra six years. The second one isn't really a saving, it's just spreading the debt out.
Run the comparison twice: once with the same remaining term, and once with the new term if it's different. Better still, model what happens if you keep paying your current repayment at the new rate. That usually pays the loan off years earlier and saves the most interest.
In practice, keeping your old repayment is one of the simplest ways to build wealth from a refinance. You're already used to that amount in your budget, so the saving goes straight to reducing the loan instead of disappearing into everyday spending.
What calculators can't tell you
A calculator assumes rates stay the same for the whole term, which they won't. It also can't tell you whether you'll be approved, what the lender's valuation will be, or whether the new loan has the features you need, like an offset account or splits. Features can be worth more than a small rate difference, especially if you hold savings in offset.
Use the calculator to decide whether a conversation is worthwhile. Then we can check real lender pricing, policies and fees for your situation.
It's also worth checking the comparison rate as well as the advertised rate. The comparison rate includes most fees and charges, which gives a fairer picture when comparing loans, although it's based on a standard loan size and term and won't match your exact situation.
Worked example
The same refinance, three ways
An illustrative example. A borrower owes $468,250 with 24 years remaining at 6.54% p.a. They are offered 5.99% p.a. Rates are assumed to stay the same.
| Stay put: repayment at 6.54% over 24 years | $3,226.32 a month |
| Stay put: total interest | $460,929.85 |
| Refinance, same 24-year term: repayment | $3,068.79 a month |
| Refinance, same 24-year term: total interest | $415,560.61 |
| Refinance, reset to 30 years: repayment | $2,804.39 a month |
| Refinance, reset to 30 years: total interest | $541,328.81 |
| Refinance, keep paying $3,226.32: time to repay | About 21.6 years (259 months) |
| Refinance, keep paying $3,226.32: total interest | About $366,983 |
Resetting to 30 years gives the lowest repayment but costs about $80,399 more interest than staying put. Keeping the same term saves about $45,369. Keeping the old repayment at the new rate saves about $93,947 and clears the loan roughly 2.4 years early. Same rate, very different outcomes.
Illustrative only. Figures are examples, not a quote or a recommendation.
Common mistakes
- Entering the original loan amount instead of the current balance.
- Comparing a 24-year loan with a 30-year loan and calling the difference a saving.
- Leaving out switching costs or fixed rate break costs.
- Focusing only on monthly repayments and ignoring total interest.
- Treating the calculator result as an approval or a guaranteed saving.
Frequently asked questions
Next steps
Talk to franklenn FINANCE
Try our refinancing savings calculator, then book a free discovery call with franklenn FINANCE and we'll check the numbers against real lender offers.
This guide is general information only and does not consider your objectives, financial situation or needs. It is not financial, tax or legal advice. Lender policies, rates and government schemes change. Please speak with us, and with your accountant or solicitor where relevant, before acting.