How to Use This Calculator
- 1
Enter your Current Mortgage Balance
Input the outstanding principal balance on your mortgage loan.
- 2
Specify your Interest Rate
Provide your current annual interest rate as a percentage (this rate remains the same after recast).
- 3
Input the Lump Sum Payment
Enter the amount of the large principal-only payment you plan to make before recasting.
- 4
Set the Remaining Term
Indicate the number of years left on your original mortgage term.
- 5
Review your results
The calculator displays your Monthly Savings, Original Monthly Payment, New Monthly Payment, Total Interest Saved, and Lifetime Net Savings. The insights panel shows your principal reduction percentage, annual cash flow improvement, and interest cost comparison. Optionally expand Advanced Options to adjust payments per year. A chart and table show the balance comparison over time.
Example Calculation
A homeowner with a $280,000 balance at 6.5% for 25 years wants to recast after a $50,000 lump sum payment.
Current Mortgage Balance ($)
280,000
Interest Rate (%)
6.5
Lump Sum Payment ($)
50,000
Remaining Term (years)
25
Results
Monthly Savings
$337.60
Original Payment
$1,890.58
New Payment
$1,552.98
Interest Saved
$51,281
Net Savings
$51,281
Tips
Verify Lender's Recast Policy
Not all lenders offer mortgage recasting, and those that do may have specific requirements (e.g., minimum lump sum of $5,000-$10,000, a $150-$500 fee). Always confirm your lender's policy before making a large principal payment with the intention to recast.
Consider the Opportunity Cost
While recasting lowers your monthly payment, consider if the lump sum could earn more elsewhere. At 6.5% mortgage interest, a $50,000 lump sum saves $337.60 per month — compare this return against alternative investments in 2026's market.
Recast vs. Refinance
A recast lowers your payment by reducing principal with the same rate and term (typically $150-$500 fee). A refinance involves a new loan with potentially different rates, terms, and $3,000-$6,000+ in closing costs. Choose based on your goals: lower payment (recast) vs. lower rate (refinance).
Reducing Your Monthly Payments with a Mortgage Recast
The Mortgage Recast Calculator is an invaluable tool for homeowners who have made a significant lump-sum payment towards their mortgage principal and wish to reduce their ongoing monthly payments. This calculator instantly reveals the monthly savings and total interest saved by re-amortizing the loan over the original remaining term.
For instance, a homeowner with a $280,000 balance at 6.5% interest over 25 years who makes a $50,000 lump sum payment saves $337.60 per month — reducing the payment from $1,890.58 to $1,552.98. Over the remaining 25 years, this saves $51,281 in total interest.
Maximizing the Benefits of a Mortgage Recast
A mortgage recast offers a unique opportunity for homeowners to optimize their financial situation after making a substantial principal reduction. To maximize the benefits, ensure the lump sum payment is significant enough to make a noticeable difference in your monthly payment. Most lenders require a minimum payment, often $5,000 or $10,000.
Additionally, recasting allows you to retain your original interest rate, which is particularly advantageous if current market rates are higher than your existing rate. By lowering your required payment, you free up cash flow that can be directed towards other financial goals, such as increasing savings, paying down other debts, or investing.
The Recast Amortization Principle
The Mortgage Recast Calculator applies the standard amortization formula to your mortgage's new, reduced principal balance.
It calculates both the original and recast monthly payments, then shows the difference.
New Balance = Current Mortgage Balance - Lump Sum Payment
Monthly Payment = Balance x [Monthly Rate x (1 + Monthly Rate)^Total Payments] / [(1 + Monthly Rate)^Total Payments - 1]
Monthly Savings = Original Monthly Payment - Recast Monthly Payment
Total Interest Saved = Total Interest (Original) - Total Interest (Recast)
Here, Monthly Rate is the annual interest rate divided by 12, and Total Payments is the remaining term in years multiplied by 12.
A Worked Example of a Mortgage Recast
Consider a homeowner with a current mortgage balance of $280,000, an interest rate of 6.5%, and 25 years remaining on their loan.
They receive a $50,000 inheritance and decide to make a lump sum payment before requesting a recast.
- Calculate Original Monthly Payment: For a $280,000 balance at 6.5% over 300 months (25 years), the original monthly payment is $1,890.58.
- Determine New Principal Balance: After the $50,000 lump sum, the new balance becomes $280,000 - $50,000 = $230,000.
- Calculate Recast Monthly Payment: With the new balance of $230,000 at the same 6.5% interest rate over the remaining 300 months, the new monthly payment is $1,552.98.
- Calculate Monthly Savings: The homeowner's monthly payment is reduced by $1,890.58 - $1,552.98 = $337.60.
- Calculate Total Interest Saved: Over the remaining 25 years, this recast saves the homeowner $51,281 in total interest (original interest of $287,174 vs recast interest of $235,893).
This illustrates the immediate and long-term financial benefits of a mortgage recast.
When Mortgage Recasting Makes Financial Sense
Mortgage recasting is a strategic option that makes financial sense under specific circumstances. It is particularly beneficial for homeowners who have received a substantial windfall, such as an inheritance, a large bonus, or proceeds from selling another property, and wish to apply this cash directly to their mortgage principal.
Recasting is ideal when your existing interest rate is favorable (e.g., lower than current market rates in 2026), and your primary goal is to reduce your monthly cash outflow rather than shorten the loan term or secure a new rate. It is often preferred over refinancing when avoiding new closing costs and preserving a low, locked-in interest rate are top priorities.
Frequently Asked Questions
What is a mortgage recast and how does it work?
A mortgage recast, also known as a re-amortization, is a process where your lender recalculates your monthly mortgage payments based on a reduced principal balance, without changing your original interest rate or loan term. This typically occurs after you make a large lump-sum payment to your principal. For example, a $50,000 lump sum on a $280,000 balance at 6.5% reduces the monthly payment from $1,890.58 to $1,552.98.
How much does a mortgage recast typically cost?
The cost of a mortgage recast is generally much lower than refinancing, often ranging from $150 to $500. This fee covers the administrative costs for the lender to re-amortize your loan and update their records. It is a one-time fee, unlike the extensive closing costs associated with a full refinance, which can be thousands of dollars.
What are the benefits of recasting a mortgage?
The primary benefit of recasting a mortgage is a significant reduction in your monthly mortgage payments, freeing up cash flow for other financial goals. A $50,000 lump sum on a $280,000 balance at 6.5% saves $337.60 per month ($4,051 per year). It also allows you to keep your original interest rate and avoid the high closing costs of refinancing.
When is a mortgage recast a good financial strategy?
A mortgage recast is a good strategy when you have received a substantial lump sum of money (bonus, inheritance, property sale proceeds) and your main goal is to reduce monthly expenses while retaining your current interest rate. It is particularly beneficial if your current rate is lower than prevailing market rates in 2026, making refinancing less attractive.