A mortgage recast is a great choice if you want to reduce your monthly mortgage payments by making a large, lump-sum payment toward the principal balance of your loan.
While refinancing involves getting a new loan, a recast keeps your existing loan intact but recalculates your monthly payments based on your new (now lower) principal balance. This is an effective way for those who want to lower their monthly payments without the cost of refinancing.
Let’s understand with a practical example:
Suppose your loan balance is $300,000, and your annual interest rate is 4% – You have 20 years of your mortgage.
If you make a lump-sum payment of 50,000, your new loan balance will be $250,000.
Based on the given values (new balance), your new monthly payment will be $17876.42 within the same interest rate and remaining term.
To make this even easier, our Mortgage Recast Calculator will help you calculate your new monthly payments just by looking at your given values.
Calculating the recast of your current mortgage is easy. Here’s how:
Step 1: Enter your loan Info in the respective sections:
Current Loan Balance: Enter your remaining loan amount in dollars.
Recast Payment Amount: Enter the lump-sum amount you plan to make as a recast share.
Annual Interest Rate: Enter your loan’s interest rate in decimal (e.g., 4.3 for 4.3%).
Remaining Loan Term (years): Enter the number of years left to repay your loan from this moment.
Step 2: Hit Calculate.
This will automatically calculate the given values and display the current mortgage recast.
Step 3: You can now estimate your current monthly payments before the recast and the new monthly payment, which indicates how much you need to pay monthly after adjusting your lump sum and interest.
This will help you understand how much you have saved monthly over your remaining term due to your now reduced monthly payment.
Please Note: This calculator returns a rough estimation of your values. Please consult your lender for a precise value and advice for your loan. Not all lenders offer mortgage recasts, so if they are available, please check the associated fees for recasting and decide.
Please consider the below statements before using the Mortgage Recast Calculator:
Please ensure you’ve collected all the above information about your loan, such as the Current Loan Balance, Recast Payment Amount, Annual Interest Rate, and Remaining Loan Term.
You can also tweak the values to check how they impact your savings in terms of the loan.
It’s also important to know that mortgage recasting is not always the best option for saving, so please consult your financial advisor to discuss your other documents attached to the loan principal.
What is mortgage recasting?
Mortgage recasting is when you make a large lump sum payment towards your mortgage principal, reducing the balance and recalculating the monthly payments based on the new balance.
How is mortgage recasting different from refinancing?
Recasting only changes your monthly payment amount based on a new principal balance, while refinancing replaces your existing mortgage with a new loan, potentially with a different interest rate and term.
Are there any fees associated with mortgage recasting?
Some lenders may charge a fee for recasting your mortgage, typically a few hundred dollars. It's best to check with your lender for specific details.
Will recasting my mortgage affect my interest rate?
No, recasting does not change your interest rate. It only recalculates your monthly payments based on the new, lower principal balance.
Can I recast my mortgage more than once?
Yes. Some lenders allow multiple recasts during your loan term. Although policies vary according to each loan