| |
Refinance Breakeven (Australian) |
|
How long will it take to breakeven on a mortgage refinance? That depends on a multitude of factors. These factors include your current interest rate, the new potential rate, closing costs and how long you plan to stay in your home. Use this calculator to sort through the confusion, and determine if refinancing your mortgage is a sound financial decision. Click the "View Report" button for a detailed look at your records.
|
|
|
Definitions
- Original mortgage amount
- Original amount of your mortgage.
- Appraised value
- The appraised value of your home when you purchased it.
- Current term in years
- Total length of your current mortgage in years.
- Years remaining
- Number of years remaining on your current mortgage.
- Calculate balance
- To let the calculator determine your remaining balance, based on your original loan information and years remaining, check this box. To enter your own amount, leave this box unchecked.
- Current appraised value
- The current appraised value of your home.
- Loan balance
- Balance of your mortgage that will be refinanced.
- New interest rate
- The annual interest rate for the new loan.
- New term in years
- Number of years for your new loan.
- Loan origination rate
- This is the percentage of the new mortgage that is paid to the lender as the loan origination fee. Typically this fee is 1% of the loan balance.
- Other closing costs
- Estimate of all other closing costs for this loan. This should include filing fees, appraiser fees and any other miscellaneous fees paid.
- Current payment
- Your current payment is the sum of principal, interest and LMI ( Loan Mortgage Insurance). Because refinancing does not affect your insurance or taxes, they are not included here.
- New payment
- Your new payment is the sum of principal, interest and LMI.
- Monthly LMI payment
- Monthly cost of Loan Mortgage Insurance (LMI). For loans secured with less than 20% down, LMI is estimated at 0.5% of your loan balance each year. Monthly LMI is calculated by multiplying your starting loan balance by this percent and dividing by 12. When the equity in your home exceeds the percentage required for LMI, your LMI payment drops to zero.
- Monthly PI payment
- Monthly principal and interest payment.
- Breakeven monthly payment savings
- The number of months it will take for your monthly payment reduction to be greater than closing costs.
- Breakeven LMI & interest savings
- The number of months it will take for your interest and LMI savings to exceed your closing costs.
- Breakeven total savings after-tax
- The number of months it will take for your after-tax interest and LMI savings to exceed your closing costs.
- Breakeven total savings vs. prepayment
- This is the most conservative breakeven measure. It is the number of months it will take for your after-tax interest and LMI savings to exceed both your closing costs and any interest savings from prepaying your mortgage. The prepayment amount used in this calculation is the amount that you would have to spend on closing costs.
|
|
|
