Loan repayment can feel overwhelming—especially with large monthly obligations. But did you know that by making a lump-sum payment on your loan and using a loan recast, you can significantly reduce your monthly payments and interest costs.
Recasting Loan Calculator
📘 What Is Loan Recasting?
Loan recasting (also known as reamortization) is when your lender recalculates your loan’s monthly payment based on a new, reduced principal balance after a large lump-sum payment. Unlike refinancing, recasting does not involve changing your interest rate, loan term, or applying for a new loan.
This process is most common with mortgages but may also apply to certain personal loans or auto loans, depending on the lender.
🔑 Benefits of Loan Recasting:
- ✅ Lower monthly payments
- ✅ No credit check or income verification
- ✅ Keep your current interest rate
- ✅ Save on total interest
- ✅ Avoid high refinance closing costs
🧮 What Is a Recasting Loan Calculator?
Our Recasting Loan Calculator is a simple online tool that shows how a lump-sum payment affects your loan balance and repayment schedule. It calculates your:
- New monthly payment
- Interest savings
- Total cost of the loan after recasting
- Optional time savings (if paying the same amount as before)
This calculator is perfect for homeowners, car loan borrowers, or anyone making a significant lump-sum payment on a loan.
🛠️ How to Use the Recasting Loan Calculator
✅ Step-by-Step Instructions:
- Enter Original Loan Amount
(e.g., $250,000) - Input Interest Rate
(e.g., 5.5%) - Select Original Loan Term
(e.g., 30 years) - Enter Current Loan Balance
(e.g., $210,000) - Input Remaining Loan Term (in months or years)
(e.g., 25 years left) - Enter Lump-Sum Payment Amount
(e.g., $30,000) - Click "Calculate"
🔎 You’ll See:
- New monthly payment
- Interest savings
- New total interest over loan life
- Optional amortization insights
📐 Loan Recasting Formulas (Plain Text)
1. New Principal After Lump-Sum:
New Principal = Current Balance – Lump-Sum
2. New Monthly Payment:
P = [r × New Principal] / [1 – (1 + r)^–n]
Where:
- P = New monthly payment
- r = Monthly interest rate (annual ÷ 12)
- n = Number of payments remaining
3. Interest Saved:
Interest Saved = Original Total Interest – New Total Interest
📊 Example Calculation
Let’s say:
- Original Loan: $300,000
- Interest Rate: 5%
- Term: 30 years
- Current Balance: $240,000
- Remaining Term: 25 years
- Lump-Sum Payment: $40,000
📉 Without Recasting:
- Monthly Payment = $1,610
📉 After Lump-Sum and Recast:
- New Balance = $200,000
- New Monthly Payment = $1,342
- Monthly Savings = $268
- Interest Saved ≈ $25,000+
🔁 Recasting vs Refinancing: Key Differences
| Feature | Recasting | Refinancing |
|---|---|---|
| Keeps Interest Rate | ✅ Yes | ❌ No |
| Credit Check Needed | ❌ No | ✅ Yes |
| Loan Term Changed | ❌ No | ✅ Optional |
| Closing Costs | 💵 $150–$500 | 💵 $3,000–$7,000 |
| Monthly Payments Drop | ✅ Yes | ✅ Yes |
🧠 When to Use a Loan Recast
You should consider using this calculator if:
- You receive a large sum (bonus, inheritance, home sale)
- You want to lower monthly payments
- You have a good interest rate and don’t want to refinance
- You prefer a quick, low-cost adjustment to your loan
- You want to improve cash flow for budgeting
⚠️ Important Notes
- Not all lenders allow loan recasting—check with yours
- Lump-sum requirements may apply (typically $5,000+)
- Most government-backed loans (FHA, VA, USDA) do not allow recasting
- Lenders may charge a processing fee
- Recasting works best early or mid-term in the loan
💡 Bonus Tip: Keep Paying the Old Payment Amount
If you continue paying your original higher payment after recasting, you'll:
- Pay off the loan early
- Save even more interest
- Build equity faster (especially useful for mortgages)
🧾 20 Frequently Asked Questions (FAQs)
1. What is a loan recast?
A recast is a recalculation of your loan payment based on a lower principal after a lump-sum payment.
2. Does a loan recast change my interest rate?
No. Your interest rate stays the same.
3. Can I recast any loan?
No. Recasting is typically allowed on conventional loans and sometimes auto loans. Not available for FHA/VA.
4. Does recasting require a credit check?
No. Unlike refinancing, recasting doesn’t require credit or income verification.
5. What is the benefit of recasting?
Lower monthly payments and reduced interest over the loan’s life.
6. What’s the typical fee for recasting a loan?
Lenders may charge between $150–$500 for processing.
7. Can I recast a personal loan?
It’s uncommon. Most recasts are done for mortgages or auto loans.
8. Will I save on interest by recasting?
Yes, especially if the recast is done early in the loan term.
9. Do I have to recast after a lump-sum payment?
No. You can pay down the principal and continue regular payments to pay the loan off sooner instead.
10. Does recasting change the loan term?
No. Your original loan term remains the same unless you choose to pay more monthly.
11. Can I recast multiple times?
Usually, only once. Some lenders may allow more—ask them.
12. What’s the minimum lump-sum for a recast?
Typically $5,000–$10,000, but it varies by lender.
13. Is this the same as refinancing?
No. Recasting keeps your original loan and rate; refinancing replaces your loan with a new one.
14. Does recasting affect my escrow account?
No. Escrow for taxes and insurance remains unchanged.
15. Is recasting worth it late in the loan?
Not usually. Most benefits come early or mid-term when interest is higher.
16. Can recasting help with financial hardship?
It may lower payments but isn't a hardship solution.
17. Can I recast an ARM (Adjustable Rate Mortgage)?
Rarely. Most lenders do not allow recasting ARMs.
18. What if I sell the property later?
A recast builds more equity, which benefits you at resale.
19. Can I use bonus money to recast?
Yes. Any lump-sum payment qualifies if it meets the lender’s rules.
20. Is the Recasting Loan Calculator free?
Yes! Our calculator is 100% free and available online 24/7.
🧠 Final Thoughts
The Recasting Loan Calculator is a smart, simple, and effective tool for anyone looking to lower their loan payments without going through the costly and complex process of refinancing. By applying a lump-sum payment to reduce your loan principal and recalculating your monthly payment, you can improve your cash flow, save on interest, and stay in control of your financial goals.