Refinance

Refinance break-even

Including the prepayment penalty, what month does this pay back?

Compares the existing payment with a new one, adds closing costs and a prepayment charge — step-down, yield maintenance or defeasance — and plots cumulative saving against the month it turns positive.

Every default here is an illustrative figure chosen to be plausible. Nothing on this page is a rate sheet, a quote or an offer, and no licence or NMLS number exists to attach to it.

The existing loan

The new loan

Prepayment

Monthly change——
Prepayment charge——
Total cost to refinance—Costs plus the penalty
Break-even——

Cumulative position

Illustrative

The line starts below zero by the full cost of refinancing and climbs by the monthly saving. Where it crosses the axis is the month the decision pays back — and if you sell or refinance again before that month, it did not.

Cumulative saving after refinancingA line rising from the cost of refinancing to break-even.

What each prepayment structure would cost

The same loan, the same day, under four different exit clauses. The clause is set by the capital source, not by the property — which is why it belongs in the decision to borrow, not the decision to refinance.

StructureChargeTotal costBreak-even

Payment comparison

LineExistingNew

Assumptions on this page

  • Yield maintenance and defeasance are modelled as the present value of the rate spread over the remaining lockout — the arithmetic a broker sketches, not a servicer’s calculation. A real defeasance quote comes from a defeasance consultant and includes securities, legal and accommodation costs.
  • Defeasance is shown at an 8% premium over the yield-maintenance figure to stand in for those transaction costs.
  • Break-even ignores the balance difference between the two loans — a longer new amortisation lowers the payment but repays less principal, which is a real cost this simple comparison does not price.
  • Cash out is added to the new balance and therefore to the new payment.
  • Illustrative arithmetic on a demonstration site.

Want a person to look at the real numbers?

Demonstration

On a live site this is where the deal would go. Here it validates and stops.

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