How to use and examples
3 steps
- Enter current balance, interest rate, and remaining term.
- Set refinanced rate, term, and closing costs (fixed amount or percentage).
- Review net-worth gap (cashflow + equity), and break-even timing.
Input examples
- Example 1: 30,000,000 balance, 30 years left, 1.2% to 0.8%, 2.2% closing costs, 10-year holding period.
- Example 2: Same rates with 2,000,000 cash-out and a 20-year new term.
This model excludes tax credits, insurance, guarantees, and lender-specific fee rules.
Inputs
Results
Cumulative net-worth gap chart
Yearly cumulative table
| Year | Cumulative cashflow gap (old-new) | Equity gap (old-new) | Cumulative net-worth gap |
|---|
How it’s calculated
- Monthly payment uses the standard amortisation formula, with a zero-rate fallback to principal divided by months.
- Monthly net-worth change is evaluated as cashflow difference plus the change in equity gap.
- Break-even month is the first month where cumulative net-worth gap, including closing-cost impact (cash payment or roll-in), reaches zero or above.
- Discounted break-even applies the optional discount rate to each monthly net-worth change.
- Cash-out is treated as received cash and additional debt at the same time (tax/investment effects are excluded).
Informational model only. Verify with actual lender disclosures before making decisions.
FAQ
What is net-worth comparison?
It compares refinance scenarios using both payment differences and remaining balance differences at the same month.
Can refinancing increase total interest?
Yes. A longer new term can reduce monthly payment but increase total interest paid over time.
What if I roll in closing costs?
Upfront cost becomes smaller, but principal and interest burden can increase.
Does this include tax and insurance effects?
No. This tool focuses on principal and interest cash flows only.