# What will a mortgage recast save?

Computes the new monthly payment after a lump-sum mortgage recast, the interest it saves, and how it compares with paying the lump sum and keeping the old payment.

- Page: https://www.acalculator.org/finance/mortgage-recast-calculator
- JSON spec: https://www.acalculator.org/finance/mortgage-recast-calculator.json
- Version: 1999e5ee12c0

## Default answer

Example with the default inputs (Mortgage balance today $300,000.00, Interest rate 6.5%, Months left to pay 300, Lump sum $50,000.00, Recast fee $250.00, First payment after the recast September 29, 2026) on the example date Tuesday, September 29, 2026: Paying $50,000.00 on $300,000.00 and recasting lowers the payment from $2,025.62 to $1,688.02, saving $51,281.07 of interest.

## Inputs

| Key | Label | Description |
| --- | --- | --- |
| balance | Mortgage balance today | The principal you owe today, before the lump sum. |
| rate | Interest rate | The mortgage’s fixed yearly rate. A recast keeps it. |
| left | Months left to pay | The number of monthly payments left on the mortgage, for example 300 for 25 years. |
| lump | Lump sum | The extra principal you pay before the recast. |
| fee | Recast fee | The fee the servicer charges to recast the loan. |
| start | First payment after the recast | The month of the first new payment. It dates the schedule and the payoff month. |

## Outputs

| Key | Label | Description |
| --- | --- | --- |
| newPayment | New monthly payment | The payment after the recast: the balance minus the lump sum, repaid over the months left. |
| oldPayment | Payment today | The payment that repays today’s balance over the months left. |
| lower | Lower by | How much less you pay each month after the recast. |
| savedRecast | Interest saved by recasting | The interest saved compared with no lump sum, when the payment is recast. |
| breakEven | Months to earn back the fee | How many months of lower payments it takes to cover the recast fee. |
| savedPrepay | Interest saved keeping the old payment | The interest saved compared with no lump sum, if you pay the lump sum and keep paying the old amount. |
| sooner | Months sooner keeping the old payment | How many months earlier the loan ends if you pay the lump sum and keep paying the old amount. |
| interest | Interest after the recast | All the interest paid over the months left, after the recast. |
| after | Balance after the lump sum | Today’s balance minus the lump sum. |

## Method

new payment = (B − lump) × r ÷ (1 − (1 + r)^−n), with B the balance, r the rate ÷ 12, and n the months left; old payment is the same formula on B; each plan runs month by month (interest = balance × r).

## Assumptions

- The rate and the number of months left do not change with the recast.
- Today’s payment is the one that repays today’s balance over the months left.
- The lump sum is paid now, before the first new payment; the fee is paid in cash, not added to the loan.
- Taxes, insurance, and mortgage insurance in the payment are not included.
- Values are not rounded to the cent between months; only the display is rounded.

## Worked examples

1. balance = $300,000.00, rate = 6.5%, left = 300, lump = $50,000.00, fee = $250.00 gives oldPayment = $2,025.62, newPayment = $1,688.02, savedRecast = $51,281.07, savedPrepay = $143,645.76, sooner = 95, breakEven = 1. Source: hand calculation in content.mdx; Python 3 in docs/progress/WP-31/python/recast.py.
2. balance = $120,000.00, rate = 0%, left = 240, lump = $20,000.00 gives oldPayment = $500.00, newPayment = $416.67, sooner = 40, savedRecast = $0.00. Source: hand calculation in content.mdx: at 0%, 120,000 ÷ 240 and 100,000 ÷ 240; 100,000 ÷ 500 = 200 months.
3. balance = $200,000.00, rate = 7%, left = 360, lump = $10,000.00, fee = $500.00, start = 2026-11-01 gives lower = $66.53, breakEven = 8, savedRecast = $13,950.89, sooner = 52. Source: hand calculation in content.mdx; Python 3 in docs/progress/WP-31/python/recast.py.

## FAQ

### What is a mortgage recast?

You pay a lump sum toward the principal and the lender works out a new, lower payment on the smaller balance. The rate and the end date stay the same. Without a recast, a lump sum keeps your payment the same and ends the loan sooner.

### How is the new payment calculated?

The lender re-amortizes the balance after the lump sum over the months left: payment = (B − lump) × r ÷ (1 − (1 + r)^−n), with r the rate ÷ 12 and n the months left. $300,000 at 6.5% with 300 months left is $2,025.62 a month; after a $50,000 lump sum it is $1,688.02.

### Is recasting better than paying the lump sum and keeping my payment?

Keeping the old payment always saves more interest, because the extra money each month keeps paying down principal. In the example it saves $143,645.76 and ends the loan 95 months sooner, against $51,281.07 saved by recasting. Recasting is for when you want the lower monthly payment and the flexibility it gives.

### What does a recast cost?

Lenders usually charge a fee of a few hundred dollars and may ask for a minimum lump sum. The page shows how many months of lower payments it takes to earn the fee back.

### Can every mortgage be recast?

No. It is up to the lender, and government-backed loans such as FHA, VA, and USDA loans generally cannot be recast. Ask your servicer before you send a lump sum.

### How is a recast different from a refinance?

A refinance replaces your loan with a new one, often at a new rate and term, with closing costs. A recast keeps your loan, rate, and end date and only lowers the payment to match the smaller balance.

## Sources

- PNC, What Is a Mortgage Recast? https://www.pnc.com/insights/personal-finance/borrow/what-is-mortgage-recast.html
- Consumer Financial Protection Bureau, How does paying down a mortgage work? https://www.consumerfinance.gov/ask-cfpb/how-does-paying-down-a-mortgage-work-en-1943/
- Consumer Financial Protection Bureau, What is a prepayment penalty? https://www.consumerfinance.gov/ask-cfpb/what-is-a-prepayment-penalty-en-1957/
- Amortized loan payment and number of payments: S. A. Broverman, Mathematics of Investment and Credit, chapter 3.