What this calculator does
Find out how much a lump sum would lower your mortgage payment. Enter what you owe, your rate, the time left, the lump sum and the fee. You'll see your new payment and how much interest you'd save.
A recast means your loan servicer works out a new payment after you pay down a big chunk. Your rate and end date stay the same, and you don't take out a new loan. The other choice is to pay the same lump sum and leave your payment alone. That finishes the loan sooner, and this page compares the two.
Where it's used
Why this math matters outside the classroom:
- After selling a house. A buyer puts $50,000 from a sale toward a $300,000 mortgage and cuts the payment by about $337.60.
- Recast or prepay. A couple compares $50,981 of savings from a recast with $143,646 from prepaying.
- Planning for retirement. A worker near retirement lowers the required payment to about $1,688 before income falls.
- Classroom finance. Students rerun the payment formula on a smaller balance and compare it with paying off the same loan early.
Grade level and standards: Grades 11–12; Common Core State Standards for Mathematics HSA.SSE.B.4. © Copyright 2010. National Governors Association Center for Best Practices and Council of Chief State School Officers. All rights reserved.
How to use it
- Enter your balance, your interest rate and the time left on the loan.
- Enter the lump sum you plan to pay.
- Enter the fee your servicer charges for a recast.
- Read your new payment, then compare the savings on each path.
What the inputs mean
- Current mortgage balance
- The principal you owe today, from your latest statement.
- Time left on the loan
- Use the time left on your loan, not its original length.
- Recast fee
- Your servicer sets the fee and any minimum lump sum. Ask them first, because not every loan can be recast.
Formula and method
i = yearly rate ÷ 12; payment = P × i ÷ (1 − (1 + i)^(−n)) new balance = balance − lump sum recast payment = same formula, with the new balance and the same n recast savings = interest if you do nothing − interest after the recast − fee prepay savings = interest if you do nothing − interest paid at the old payment on the new balance
P is the balance, i is the monthly interest rate and n is the months left. Principal and interest are all this page counts, so tax and insurance in your payment don't change.
With a recast, the lump sum shrinks the balance, and the payment shrinks to match. The loan still ends on the same date.
Without a recast, your payment stays put. More of each payment then goes to the balance, because there's less interest. So the loan finishes early, which saves more interest. The calculator counts that month by month.
Worked example
You owe $300,000 at 6.5% with 25 years left. You pay a $50,000 lump sum, and the recast fee is $300.
- Current payment: about $2,025.62 a month for 300 months.
- New balance: $300,000 − $50,000 = $250,000.
- Recast payment: about $1,688.02 a month.
- Payment drop: $2,025.62 − $1,688.02 ≈ $337.60 a month.
- Recast savings: about $50,981.07 of interest, after the fee.
- Prepaying instead: the loan ends after 205 payments, 7 years 11 months early.
- Prepay savings: about $143,645.76 of interest.
Result: The recast lowers your payment to about $1,688.02. Prepaying keeps your payment but saves about $92,664.69 more.
Understanding the result
A recast buys you breathing room each month. Prepaying buys you a smaller interest bill and an earlier finish. Neither is always right.
If money is tight, or your income is about to drop, the lower required payment may be worth more than the extra savings. In the example, that's $337.60 a month freed up.
After a recast, you can still pay extra whenever you like. If you kept paying your old amount, you'd land close to the prepay path. You'd keep the option to fall back to the lower payment, for the price of the fee.
Assumptions and limitations
- Your rate is fixed, and your loan is on schedule.
- Your current payment is worked out from the balance, rate and time left. It covers principal and interest only.
- The lump sum is paid today, before your next payment.
- Savings aren't adjusted for what the lump sum could earn elsewhere.
- Not every loan or servicer offers a recast. Check for a minimum lump sum too.
- It doesn't include escrow for tax and insurance, or any mortgage insurance.
- It doesn't cover adjustable-rate loans, where the rate can change.
- This is an estimate. Ask your servicer for the actual new payment.
Frequently asked questions
What does it mean to recast a mortgage?
You pay a lump sum toward the principal, and your servicer works out a lower payment on the new balance. The rate and end date don't change, and you don't need a new loan.
How is a recast different from a refinance?
A refinance replaces your loan with a new one, usually with a new rate and closing costs. A recast keeps your loan and changes only the payment, for a small fee.
Which saves more, a recast or prepaying?
Prepaying without a recast saves more interest, because you keep paying the higher amount. In the example, it saves about $92,664.69 more. A recast gives you a lower required payment in exchange.
Does a recast change my interest rate?
No. Your rate stays the same. You pay less interest because you owe less, not because the rate fell.
How this calculator is checked
Method: Standard level-payment amortization on the reduced balance over the same months; prepay path by month-by-month schedule. Tests use separate 50-digit decimal arithmetic and a separate decimal loop. The calculation is covered by automated tests with known reference values and edge cases. Last updated 2026-10-31. Found a problem? Tell us.
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