Mortgage Recasting Calculator

If you’re a homeowner looking to lower your monthly mortgage payments without refinancing, there’s a smart, lesser-known option available: mortgage recasting. It allows you to reduce your payment burden by applying a lump-sum payment toward your loan principal, after which your lender recalculates the loan based on the new balance. The result? A lower monthly payment while keeping your same interest rate and loan term.

What Is Mortgage Recasting?

Mortgage recasting, also known as loan reamortization, is a process where a borrower makes a large, one-time payment toward their principal, and the lender recalculates the monthly payment based on the new, lower loan balance and the remaining term. Unlike refinancing, recasting:

• Keeps the same loan term
• Retains the existing interest rate
• Requires no credit check
• Has minimal fees (often $100–$500)
• Is faster and simpler than a refinance

Recasting is ideal when you want to lower your monthly payment while avoiding the costs and paperwork associated with refinancing.

How to Use the Mortgage Recasting Calculator

Our Mortgage Recasting Calculator is user-friendly and efficient. It helps you visualize how much you could save after a lump-sum principal reduction.

Step-by-Step Instructions:

1. Enter Original Loan Amount
   • The total mortgage you borrowed (e.g., $300,000).
2. Enter Interest Rate
   • Your loan’s annual interest rate (e.g., 4.5%).
3. Enter Original Loan Term
   • In years (e.g., 30 years).
4. Enter Remaining Loan Balance
   • The current unpaid principal (e.g., $260,000).
5. Enter Remaining Loan Term (in months)
   • For example, if you’ve paid off 5 years of a 30-year loan, the remaining term is 300 months.
6. Enter Lump-Sum Payment Amount
   • The extra principal amount you plan to pay (e.g., $50,000).
7. Click “Calculate”
   • The calculator will display your:
     • New lower monthly payment
     • Monthly savings
     • Total interest saved
     • Adjusted amortization schedule

Mortgage Recasting Formula (Plain Text)

To calculate the new monthly payment after recasting, the following amortization formula is used:

1. New Loan Balance

New Balance = Current Balance – Lump Sum Payment

2. Monthly Interest Rate

Monthly Rate = Annual Interest Rate ÷ 12

3. New Monthly Payment

Payment = New Balance × (r × (1 + r)^n) ÷ ((1 + r)^n – 1)

Where:

• r = monthly interest rate
• n = number of months remaining
• New Balance = principal after lump sum applied

Example Calculation

Scenario:

• Original Loan: $300,000
• Interest Rate: 4.5%
• Original Term: 30 years
• Remaining Balance: $260,000
• Remaining Term: 25 years (300 months)
• Lump Sum Payment: $50,000

Step 1: New Balance

$260,000 – $50,000 = $210,000

Step 2: Monthly Rate

4.5% ÷ 12 = 0.375% or 0.00375

Step 3: New Monthly Payment

$210,000 × (0.00375 × (1 + 0.00375)^300) ÷ ((1 + 0.00375)^300 – 1)
≈ $1,166.79

Original Monthly Payment (on $260,000): ≈ $1,443.77
Monthly Savings = $277
Total Interest Savings over 25 years: Over $83,000

Pros and Cons of Mortgage Recasting

Is Recasting Better Than Refinancing?

It depends on your goals.

Choose Recasting if:

• You want lower monthly payments.
• You’re happy with your current rate.
• You don’t want to restart the loan term.

Choose Refinancing if:

• Interest rates have dropped significantly.
• You want to shorten the loan term.
• You need cash out for other purposes.

When to Consider Mortgage Recasting

• You’ve received a bonus, inheritance, or settlement.
• You want lower monthly payments for long-term cash flow.
• You’re staying in your home long-term.
• Your lender does not charge excessive recasting fees.

20 Frequently Asked Questions (FAQs)

1. What is mortgage recasting?

It’s the process of lowering your monthly mortgage payment by paying down the principal with a lump sum.

2. Does recasting affect my interest rate?

No. Your interest rate stays the same.

3. Is recasting the same as refinancing?

No. Refinancing replaces the loan; recasting modifies payments on your current loan.

4. How much can I save with recasting?

It depends on your lump sum and interest rate. Use the calculator to estimate savings.

5. Can I recast my mortgage multiple times?

Some lenders allow multiple recasts; others may limit it.

6. Are there fees for recasting?

Yes, typically between $100 and $500.

7. Do all lenders offer mortgage recasting?

No. It depends on your loan type and lender policy.

8. Can I recast an FHA or VA loan?

Usually not. These loans typically don’t qualify for recasting.

9. What’s the minimum lump sum for recasting?

Many lenders require $5,000 or more.

10. Is there a credit check for recasting?

No credit check or income verification is required.

11. Does recasting shorten my loan term?

No. It only reduces monthly payments unless you pay more monthly voluntarily.

12. Will recasting eliminate PMI?

It can, if your new balance falls below 80% loan-to-value.

13. Can I invest the lump sum instead of recasting?

Yes. Compare investment returns vs. interest saved from recasting.

14. Do jumbo loans qualify for recasting?

Many do, but check with your lender.

15. How long does the recasting process take?

Usually 30–60 days from lump-sum payment and request.

16. Does recasting affect taxes?

It generally does not have tax implications. Consult a tax advisor for specifics.

17. Can I still pay extra after recasting?

Yes. You can make additional principal payments anytime.

18. Will recasting appear on my credit report?

No. It won’t show as a new loan or affect your credit score.

19. Is recasting available on investment properties?

Some lenders allow it. Others restrict it to primary residences.

20. Is this calculator free to use?

Yes. It’s 100% free and gives instant results.

Final Thoughts

Mortgage recasting is one of the simplest, most cost-effective ways to reduce your monthly housing expenses — all without the paperwork or costs of refinancing. Whether you’re a first-time homeowner or nearing the end of your loan, the Mortgage Recasting Calculator helps you clearly see how a lump-sum payment can lower your payments and save you thousands in interest.