Mortgage Recast Savings Calculator
Enter your current mortgage balance, fixed rate, remaining term, and planned principal payment. The calculator estimates the lower principal-and-interest payment, recast fee payback, remaining interest, and lump sum needed to reach a target payment.
Monthly payment reduction$337.60
- Current monthly principal and interest
- $2,025.62
- Recast monthly principal and interest
- $1,688.02
- Remaining interest without recasting
- $307,686.45
- Remaining interest after recasting
- $256,405.37
- Interest saved
- $51,281.07
- Net savings after recast fee
- $51,031.07
- Recast fee payback period
- 1 month
- Lump sum needed for target payment
- $33,415.15
- Remaining scheduled payments
- 300
Before and after recasting
| Scenario | Balance used | Monthly payment | Remaining interest |
|---|---|---|---|
| Current loan | $300,000.00 | $2,025.62 | $307,686.45 |
| After recast | $250,000.00 | $1,688.02 | $256,405.37 |
Principal and interest only; taxes, insurance, PMI, HOA dues, and escrow changes are not included.
Assumes the fixed interest rate and scheduled maturity date stay the same after recasting.
How to use this calculator
- Enter the current principal balance from your mortgage statement.
- Enter the fixed note rate and the years left until the scheduled payoff date.
- Add the lump sum you plan to apply to principal and any recast fee quoted by your servicer.
- Enter a target principal-and-interest payment if you want to solve for the needed lump sum.
- Compare the current and recast payments, fee payback, and remaining interest.
How the recast savings are calculated
A mortgage recast keeps the same loan, rate, and scheduled payoff date, but the servicer recalculates the monthly principal-and-interest payment after you make a large principal payment. The lower balance is spread over the same remaining number of payments.
Let B be the current balance, a be the annual interest rate as a decimal, Y be the remaining term in years, L be the planned principal payment, F be the recast fee, and T be the target monthly payment. The calculator rounds the remaining term to whole monthly payments:
n = round(12 x Y)
The monthly rate is r = a / 12. When the rate is above zero, the amortization factor is:
A = (1 - (1 + r)^-n) / r
The current principal-and-interest payment is P0 = B / A. The post-payment balance is B1 = max(0, B - L), and the recast payment is P1 = B1 / A. At a zero interest rate, the same idea becomes straight-line division: P0 = B / n and P1 = B1 / n.
The monthly payment reduction is S = P0 - P1. Remaining interest without recasting is I0 = n x P0 - B. Remaining interest after recasting is I1 = n x P1 - B1. Interest saved is IS = I0 - I1, and net savings after the servicer fee is NS = IS - F. When the payment reduction is positive, the fee payback period is F / S months.
What moves the result most
The lump sum and interest rate drive most of the difference. A larger principal payment lowers the recast payment because less balance has to be amortized over the remaining term. A higher rate makes the monthly reduction and interest savings larger for the same principal payment, because more of each skipped dollar would otherwise have supported future interest.
The remaining term also matters. With many years left, the principal payment is spread across more scheduled payments, so the monthly reduction can look smaller while interest savings remain meaningful. With only a few payments left, the payment reduction can be large, but there may be little remaining interest to save.
Solving for a target payment
For the target-payment calculation, the balance that supports the target is BT = T x A, or BT = T x n at a zero rate. The lump sum needed is min(B, max(0, B - BT)). If your target payment is at least the current payment, the required lump sum is zero. If the target payment is zero, the required lump sum is the full current balance.
What this leaves out
The calculator covers principal and interest only. It does not change taxes, homeowners insurance, PMI, HOA dues, escrow shortages, or servicer-specific timing rules. It also does not compare the recast with investing the cash, refinancing, or making a principal-only payment without asking the servicer to recalculate the payment.
Worked example
Suppose the current mortgage balance is $300,000, the fixed rate is 6.5%, and 25 years remain. There are 300 monthly payments left, and the amortization factor is about 148.1027, so the current principal-and-interest payment is about $2,025.62.
If you apply a $50,000 principal payment before recasting, the balance used for the new payment is $250,000. The recast payment is about $1,688.02, which lowers the monthly principal-and-interest payment by about $337.60. Remaining interest falls from about $307,686.45 to $256,405.37, so the interest saved is about $51,281.07. After a $250 recast fee, the net savings are about $51,031.07 and the fee payback is less than one month.
With a target payment of $1,800, the balance that supports that payment is about $266,584.85. That means the lump sum needed to reach the target is about $33,415.15.
Common questions
What is a mortgage recast?
A mortgage recast is a servicing change where the lender recalculates your principal-and-interest payment after you make a large principal payment. The loan usually keeps the same interest rate and final maturity date. The payment goes down because the remaining balance is lower.
How much does mortgage recasting lower a payment?
The reduction depends on the lump sum, rate, and months remaining. In general, each dollar applied to principal lowers the payment by spreading that dollar across the remaining amortization schedule. The calculator uses the same amortization factor for the current and post-payment balances.
How much principal must I pay to reach a target payment?
The calculator first finds the loan balance that can support your target payment over the remaining term. It then subtracts that supported balance from your current balance. If the target payment is at least your current principal-and-interest payment, the required lump sum is zero.
Does a mortgage recast save interest?
Yes, applying a lump sum to principal can reduce remaining interest because future interest is charged on a smaller balance. The recast itself mainly changes the scheduled payment; the interest savings come from reducing principal. Net savings subtract the one-time recast fee.
How is a mortgage recast different from refinancing?
A recast keeps the existing loan and usually keeps the same rate, while a refinance replaces the mortgage with a new loan. Recasting can lower the payment without restarting the loan term, but it does not give you a new rate. Refinancing can change the rate and term, but it often has larger closing costs and underwriting requirements.
Do taxes, insurance, PMI, or HOA dues change after a recast?
This calculator does not change those amounts. A recast affects principal and interest, while escrow items and HOA dues follow separate rules. PMI may have its own cancellation requirements, so check the loan documents and servicer policy.