Loan Refinancing Calculator
Refinancing replaces an existing loan with a new one, usually to get a lower rate or change the term. This calculator compares the two on monthly payment, total cost and break-even.
Results
Net saving over the loan
₹3,47,256
- Monthly EMI saving
- ₹2,081.98
- Current EMI
- ₹36,547.86
- New EMI
- ₹34,465.88
- One-time costs
- ₹27,500
- Interest left on current loan
- ₹30,78,616
- Interest on new loan
- ₹27,03,859
- Break-even period
- 1 year, 2 months
- Time to recover the fees
Switching to 8.5% over 15 years saves about ₹3,47,256.29 overall after ₹27,500.00 of fees.
Show the calculation steps
- Current EMI on ₹35,00,000.00 at 9.5% for 180 months = ₹36,547.86; total payable ₹65,78,615.50.
- New EMI at 8.5% for 180 months = ₹34,465.88; total payable ₹62,03,859.21.
- One-time cost = processing fee + other fees = ₹27,500.00.
- Net saving = current total − (new total + fees) = ₹65,78,615.50 − (₹62,03,859.21 + ₹27,500.00) = ₹3,47,256.29.
- Break-even = fees ÷ monthly saving = ₹27,500.00 ÷ ₹2,081.98 ≈ 14 months.
- If the new tenure is longer than the remaining tenure, the EMI falls but total interest can still rise; compare the net saving, not just the EMI.
Why people refinance
Common reasons are a lower interest rate, a lower monthly payment or a change of tenure. Each one can help cash flow, but stretching the term may increase the total interest even if the rate is lower.
Reading the result
The net saving is the difference in total payments after including one-time costs. A positive number means refinancing is cheaper overall. If it is negative, the fees or the longer term outweigh the benefit.
Formula
EMI = P × r × (1 + r)^n ÷ ((1 + r)^n − 1)
Net saving = current total payments − (new total payments + one-time costs)
Break-even = one-time costs ÷ monthly EMI saving
Where:
- P
- = Outstanding balance
- r
- = Monthly rate of each loan
- n
- = Months remaining on each loan
Example calculation
₹35 lakh balance: 9.5% → 8.5% over 180 months, ₹10,000 closing costs
Inputs
- Outstanding Loan Balance
- ₹35,00,000
- Current Interest Rate
- 9.5 %
- Remaining Tenure
- 180 months
- New Interest Rate
- 8.5 %
- New Tenure
- 180 months
- Processing Fee
- 0.5 %
- Closing Costs
- ₹10,000
Result
- Net saving over the loan
- ₹3,47,256
- Monthly EMI saving
- ₹2,081.98
- Current EMI
- ₹36,547.86
- New EMI
- ₹34,465.88
- One-time costs
- ₹27,500
- Interest left on current loan
- ₹30,78,616
- Interest on new loan
- ₹27,03,859
- Break-even period
- 1 year, 2 months
Step-by-step
- Current EMI on ₹35,00,000.00 at 9.5% for 180 months = ₹36,547.86; total payable ₹65,78,615.50.
- New EMI at 8.5% for 180 months = ₹34,465.88; total payable ₹62,03,859.21.
- One-time cost = processing fee + other fees = ₹27,500.00.
- Net saving = current total − (new total + fees) = ₹65,78,615.50 − (₹62,03,859.21 + ₹27,500.00) = ₹3,47,256.29.
- Break-even = fees ÷ monthly saving = ₹27,500.00 ÷ ₹2,081.98 ≈ 14 months.
Important notes
- The comparison uses fixed rates for both loans.
- If you extend the tenure, the net saving may fall even though the EMI is lower.
Disclaimer: This calculator provides estimates for informational purposes and should not be considered financial advice. Actual figures from lenders, banks and investment products can differ because of fees, taxes, rounding rules and changing rates. Consult a qualified professional before making financial decisions.
Frequently asked questions
Should I refinance if the rate is only slightly lower?
Only if the net saving after costs is positive and you will keep the loan past the break-even period.
Can refinancing increase my total cost?
Yes, if you lengthen the tenure or pay high fees. Check the net saving.
What is the difference between refinancing and a balance transfer?
A balance transfer moves a loan to another lender; refinancing can be with the same or a different lender. The calculation is the same.
Related calculators
- Loan Balance Transfer CalculatorCheck whether moving a loan to a lender with a lower rate saves money after processing fees, and when you break even.
- Home Loan EMI CalculatorCalculate your home loan EMI, total interest and repayment over 5 to 30 years, with a yearly principal and interest schedule.
- Loan Prepayment CalculatorSee how much interest and time a one-time prepayment saves on a loan, by shortening the tenure or lowering the EMI.
- Mortgage Payoff CalculatorSee how extra monthly or one-time payments shorten your mortgage and how much interest you save.
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