# Mortgage Recast Calculator Re-amortise a mortgage after a lump sum: new payment, interest saved, and the prepay alternative side by side. --- - **Canonical URL:** https://dothecalculation.com/calculators/mortgage-recast-calculator - **Category:** Real Estate & Property - **Publisher:** Do The Calculation (https://dothecalculation.com) - **Cost:** Free, no account or sign-up required - **Privacy:** Runs entirely in the browser; inputs are never sent to a server - **Methodology:** https://dothecalculation.com/methodology --- ## Recast a Mortgage After a Lump-Sum Payment Apply a lump sum to principal, keep the same rate and payoff date, and see the re-amortised payment — next to what the same money does if you keep paying the old amount instead. - Same rate, same term, smaller balance, lower payment - Shows the prepay-and-keep-paying alternative side by side - Prices the servicer's recast fee against the monthly saving ## Quick Answer — How Does a Mortgage Recast Work? A recast applies a lump sum to your principal and then re-amortises the loan over the **remaining term at the same interest rate**. The rate does not change, the payoff date does not change, and there is no new loan — only the monthly payment falls, because a smaller balance is being spread over the same number of months. The arithmetic is the ordinary amortisation formula run twice, before and after the lump sum: • **New Balance** = Current Balance − Lump Sum • **New Payment** = New Balance × [ r(1+r)ⁿ ] ÷ [ (1+r)ⁿ − 1 ], where r is the monthly rate and n is the months remaining • **Monthly Saving** = Old Payment − New Payment **Worked example:** a $320,000 balance at 6.5% with 312 months (26 years) left pays **$2,127.74** a month. Put $50,000 against principal and re-amortise the remaining **$270,000** over the same 312 months and the payment becomes **$1,795.28** — a saving of **$332.46 a month**, or **$3,989.51 a year**. Servicers typically charge a flat recast fee of roughly **$150 to $500** and usually require a minimum lump sum in the **$5,000 to $10,000** range, though some set it much higher. At a $300 fee, the example above recovers the cost in **under one month** of savings. ## How to Use This Calculator: Re-Amortising a $320,000 Balance Enter the balance as it stands today, not the original loan amount, along with your rate and the months remaining. A 30-year loan four years in has 312 months left, which is what the example uses. Add the lump sum you intend to apply. Applying **$50,000** to a **$320,000** balance leaves **$270,000**, and re-amortising that over 312 months at 6.5% produces the **$1,795.28** payment. Total interest over the rest of the loan falls from **$343,853.94** to **$290,126.76**, so the recast itself saves **$53,727.18** in interest. Then enter the recast fee your servicer quotes. Because the fee is flat and the saving is monthly, break-even is almost immediate: **$300 ÷ $332.46 = 0.9 months**. This is the single largest structural difference between a recast and a refinance, where several thousand dollars of closing costs usually take two to four years to earn back. The last output is the one most calculators leave out. Applying the same $50,000 but **keeping the old $2,127.74 payment** clears the loan in **216 months** instead of 312 — eight years early — with only **$189,591.19** of interest. That is **$100,535.57 less** interest than the recast produces, because every dollar above the recast payment goes straight to principal. The recast buys cash-flow relief; not recasting buys a shorter loan. Both are defensible, but they are not the same decision. ## A Second Example: A Smaller Balance and a Low Rate Recasting is less dramatic when the rate is low and the balance is modest, and the numbers should say so. Take a **$185,000** balance at **4.25%** with **228 months** (19 years) remaining, and a **$20,000** lump sum against a **$250** fee. The current payment is **$1,183.99**. After the lump sum the balance is **$165,000** and the re-amortised payment is **$1,055.99** — a saving of **$128.00 a month**, or **$1,535.98 a year**. Interest over the remaining term falls from **$84,948.92** to **$75,765.25**, a **$9,183.67** saving, and the $250 fee is recovered in **under two months**. Keeping the old payment instead retires the loan in **193 months** rather than 228 — **35 months early** — with **$63,509.39** of interest, another **$12,255.86** saved. The relative gap is smaller than in the first example because a 4.25% rate compounds far less punishingly than 6.5%, which is exactly the point: the higher your rate, the more the aggressive option is worth, and the more a recast costs you in long-run interest for the cash flow it frees up. One thing neither example changes is the payoff date after a recast. If you want the loan gone sooner, a recast is the wrong tool — the [biweekly mortgage payoff calculator](/calculators/biweekly-mortgage-payoff-calculator) models the opposite approach, where a small permanent increase in what you pay each year shortens the term without any lump sum at all. ## Recast, Refinance, or Just Prepay? **Recast versus refinance** is the comparison most people are actually making. A recast keeps your existing note: no credit pull, no appraisal, no underwriting, no new closing costs, and critically **no new rate**. If you are sitting on a 3.5% loan, refinancing to today's rates to lower a payment is self-defeating, and a recast is the only way to reduce the payment without giving up the rate. If your rate is well above market, the calculus flips and the [refinance break-even calculator](/calculators/refinance-break-even-calculator) is the right tool, because a lower rate can beat a smaller balance. **Recast versus prepay** is the comparison people skip. Both start with the same cheque to the servicer. The recast converts the lump sum into monthly cash flow; plain prepayment converts it into a shorter loan and much less interest. In the first example the difference is $332 a month against $100,536 of interest and eight years. Neither answer is universally right — freed-up cash flow has real value if it lets you keep working through a lean period, invest at a higher return, or absorb an income drop. **Not every loan can be recast.** Conventional loans held by Fannie Mae or Freddie Mac generally can be; FHA, VA, and USDA loans generally cannot. Jumbo and portfolio loans vary entirely by lender. Confirm with your servicer before you send money, because a lump sum applied without a recast agreement is simply a principal prepayment — helpful, but it will not lower your payment. For the wider picture, the [mortgage calculator](/calculators/mortgage-calculator) builds the payment from scratch including taxes and insurance, and the [mortgage points break-even calculator](/calculators/mortgage-points-break-even-calculator) handles the other common "should I pay cash up front" question — buying down the rate at origination rather than paying down principal later. ## Limitations This calculator performs exact amortisation arithmetic on the figures you enter and assumes a fixed rate for the remainder of the term. On an adjustable-rate mortgage the post-recast payment will change again at the next adjustment, and the interest totals shown here will not hold. It also assumes the lump sum is applied as a principal reduction on the recast date, which is how servicers process it, but the exact effective date can shift the first month's interest slightly. The payment shown is principal and interest only. Property taxes, homeowners insurance, mortgage insurance, and HOA dues are unaffected by a recast, so your actual monthly bill will fall by the amount shown here and no more. If you carry private mortgage insurance, a large principal reduction may also let you request PMI removal once the balance crosses 80% of the original value — a separate saving this tool does not model. Nothing here accounts for the opportunity cost of the lump sum. Money used to pay down a 4.25% mortgage earns a guaranteed 4.25% after-tax equivalent return, which may or may not beat what the same money would do invested, held as an emergency fund, or applied to higher-rate debt. Recasting also permanently converts liquid savings into illiquid home equity, recoverable only by selling or borrowing against the house. This is a general educational tool, not financial advice — confirm recast eligibility, minimum lump sums, and fees with your servicer, and consult a qualified professional about your own situation. ## Related Calculators If the goal is a shorter loan rather than a smaller payment, the [Biweekly Mortgage Payoff Calculator](/calculators/biweekly-mortgage-payoff-calculator) shows what one extra payment a year does to the term. If your rate is above market, run the [Refinance Break-Even Calculator](/calculators/refinance-break-even-calculator) before assuming a recast is the cheaper route, and the [Mortgage Points Break-Even Calculator](/calculators/mortgage-points-break-even-calculator) for the same question at origination. To rebuild the whole payment including escrow items, start from the [Mortgage Calculator](/calculators/mortgage-calculator), and the [Mortgage Guide](/blog/finance/mortgage-guide) covers the payment formula this page re-runs twice. ## Frequently asked questions ### How does a mortgage recast work? You pay a lump sum against principal and the servicer re-amortises the loan over the same remaining term at the same rate, which lowers the monthly payment. A $320,000 balance at 6.5% with 312 months left drops from $2,127.74 to $1,795.28 a month after a $50,000 lump sum — a $332.46 monthly saving. ### What does a mortgage recast cost? Servicers typically charge a flat fee of roughly $150 to $500, with no appraisal, credit check, or closing costs. At a $300 fee against a $332.46 monthly saving, break-even arrives in under one month — the structural advantage a recast has over a refinance, where several thousand in closing costs usually take years to recover. ### Does recasting change my interest rate or payoff date? No. That is the defining feature. The note is unchanged, so the rate and the maturity date both stay exactly where they were. Only the payment falls, because the same number of months now has to absorb a smaller balance. ### Is it better to recast or just pay extra principal? It depends on whether you want cash flow or a shorter loan. Recasting the $50,000 example saves $53,727 of interest and $332 a month. Applying the same $50,000 but keeping the old payment clears the loan 96 months early with $189,591 of interest — $100,536 less than the recast. Recasting buys monthly relief; prepaying buys time and interest. ### How much do I have to pay to recast a mortgage? Most conventional lenders require a minimum lump sum of about $5,000 to $10,000, and some set it considerably higher. Some servicers also require the reduction to be a minimum percentage of the balance. Confirm the threshold before sending funds, since a payment below it is treated as an ordinary principal prepayment. ### Can FHA and VA loans be recast? Generally not. Recasting is normally available on conventional loans backed by Fannie Mae or Freddie Mac; FHA, VA, and USDA loans typically cannot be recast, and jumbo or portfolio loans vary entirely by lender. Ask your servicer in writing before you commit the money. ### Does a recast lower my escrow payment too? No. Only the principal and interest portion changes. Property taxes, homeowners insurance, mortgage insurance, and HOA dues are unaffected, so your total monthly bill falls by exactly the principal-and-interest saving and no more. ### Should I recast if I have a very low interest rate? A recast is the only way to lower the payment while keeping a below-market rate, which is precisely why it appeals to borrowers holding 3% and 4% notes. But the interest saved is smaller at low rates: on a $185,000 balance at 4.25%, a $20,000 lump sum saves $9,183.67 in interest against $53,727.18 on the 6.5% example. Weigh that against what the cash could earn elsewhere. ## Related concepts - **Re-Amortisation** — Recalculating the level payment on a loan after the balance changes, holding the rate and remaining term fixed. The whole of what a recast does. - **Principal Curtailment** — A lump-sum payment applied directly to principal. Without a recast agreement it shortens the loan rather than lowering the payment. - **Recast Fee** — The flat servicing charge for processing a re-amortisation, usually $150 to $500 — and the reason a recast breaks even in weeks where a refinance takes years. ## Related guides - [Mortgage Guide: Payment Formula, Costs, and PMI](https://dothecalculation.com/blog/finance/mortgage-guide) — Understand how mortgage payments work, what the DTC mortgage calculator includes, and how taxes, insurance, PMI, and loan term affect cost. - [Mortgage Amortization Schedule: Formula and Guide](https://dothecalculation.com/blog/finance/mortgage-amortization-schedule) — Learn how mortgage payments split between principal and interest, read an amortization schedule, and test loan terms with DTC calculators. ## Related calculators - [Biweekly Mortgage Payment & Payoff Accelerator](https://dothecalculation.com/calculators/biweekly-mortgage-payoff-calculator) — Compare biweekly versus monthly mortgage payment schedules to calculate how much faster you pay off your loan and total interest saved. - [HECM Reverse Mortgage Calculator](https://dothecalculation.com/calculators/reverse-mortgage-payment-calculator) — Estimate HECM reverse mortgage principal limits, available lump sum proceeds, and monthly tenure payment options for eligible homeowners. - [Construction Loan Calculator](https://dothecalculation.com/calculators/construction-loan-calculator) — Interest on the drawn balance month by month, the interest reserve, and the permanent payment after conversion. - [Down Payment Assistance Savings Calculator](https://dothecalculation.com/calculators/down-payment-assistance-savings-calculator) — Value a grant, forgivable, deferred or repayable second against mortgage insurance saved and years of saving avoided. - [Interest-Only Mortgage Calculator](https://dothecalculation.com/calculators/interest-only-mortgage-calculator) — Both payment phases, the payment shock when the interest-only period ends, and the equity forgone. - [Bridge Loan Calculator](https://dothecalculation.com/calculators/bridge-loan-calculator) — Interest-only cost, origination points, effective annual rate, and the surplus left after the sale. --- _This calculator performs exact amortisation arithmetic on the figures you enter and assumes a fixed rate for the remaining term; on an adjustable-rate loan the payment will change again at the next adjustment. It models principal and interest only, so taxes, insurance, and HOA dues are unaffected by the recast. Recast eligibility, minimum lump sums, and fees are set by your servicer and vary by loan type — FHA, VA, and USDA loans generally cannot be recast at all. This is a general educational tool, not financial advice; confirm terms with your servicer before committing funds._ --- _Source: [Do The Calculation](https://dothecalculation.com/calculators/mortgage-recast-calculator). Quote freely with attribution and a link to this page._