Mortgage Recast Calculator
After a lump sum, you can lower the payment or keep it and finish early. See what each choice costs, and how long the recast fee takes to recover.
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Recasting is a choice, not an improvement
A recast does one thing: it recalculates your payment so the loan still ends on its original date. You pay a lump sum, the balance falls, and the lender spreads the smaller balance over the remaining months. The payment goes down. The term does not change, and the rate does not change.
That is worth understanding clearly, because a recast is often described as if it were free money. It is not. Paying 50,000 dollars off a 280,000 dollar balance cuts the payment from 1,890 to 1,552.98 — a 337 dollar monthly reduction, which is real relief. But you could instead have paid the same 50,000 and kept the payment at 1,890, which clears the loan 101 months early and saves 89,663 dollars of interest rather than 51,185.
So the trade is precise: recasting buys you 337 dollars a month, and it costs 38,478 dollars of interest compared with keeping the payment. Whether that is a good exchange depends entirely on whether you need the monthly cash. If you do not, keeping the payment is better by a wide margin.
The fee is a side issue. Recasts usually cost a few hundred dollars, and against a 337 dollar monthly reduction that is recovered in the first month. A recast fee is never the reason to decline a recast — the interest you give up by lowering the payment is.
How the comparison is calculated
The remaining term is derived from your balance, rate and payment rather than asked for, because those three numbers already determine it. Both paths are then run from the reduced balance.
| Symbol | Meaning |
|---|---|
Balance |
What you owe today, before the lump sum |
i |
Monthly interest rate: the annual rate divided by 12 |
n |
Months remaining, derived from the balance, rate and payment |
P |
The balance after the lump sum |
Keeping the payment shortens the term; recasting lowers the payment and leaves the term alone. The two paths are compared over the same loan, so the difference between them is exactly the value of the choice.
Worked example: 280,000 dollars, 50,000 lump sum
A 6.5 percent mortgage with 1,890 dollars a month and 300 months remaining.
| Figure | Result |
|---|---|
| Current balance | $280,000.00 |
| Lump sum | $50,000.00 |
| Balance afterwards | $230,000.00 |
| Current payment | $1,890.00 |
| Payment after recasting | $1,552.98 |
| Monthly reduction | $337.02 (17.8%) |
| Interest saved by recasting | $51,184.77 |
| Interest saved by keeping the payment | $89,662.84 |
| Extra gain from keeping it | $89,412.84 |
| Months saved by keeping the payment | 101 |
| Recast fee recovered after | 1 month |
Both paths start with the same 50,000 dollars. Recasting turns it into 337 dollars a month for the next 25 years. Keeping the payment turns it into 101 fewer months of payments and 38,478 dollars more interest saved. The fee is irrelevant either way — it repays itself in a month. What you are really choosing is cash flow against total cost.
Estimates only. Your lender's figures may differ because of fees, escrow and rounding.
Deciding between a recast and an extra payment
Recast only if you need the monthly cash
The whole benefit of a recast is a lower payment. If your budget is comfortable, you are paying 38,478 dollars for relief you do not need. If cash flow is genuinely tight, that relief may be worth every penny — but it should be a deliberate choice, not a default.
Note that the lump sum is not refundable
Once the money is in, it is in. Recasting does not give you a line of credit against it, and a HELOC opened afterwards would cost interest and closing costs. If there is any chance you will need that 50,000 dollars in the next few years, an offset or a HELOC keeps it accessible; a recast does not.
Compare against refinancing
A recast keeps your rate; a refinance changes it and usually adds closing costs. If rates have fallen since you borrowed, refinancing may beat both options here. If rates have risen, a recast is the only way to lower the payment without giving up your rate.
Ask whether your lender even offers it
Not all loans are recastable, and some lenders charge considerably more than others. Government-backed loans have their own rules, and a recast usually requires the lump sum to be a principal reduction rather than a prepayment held against future instalments.
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Frequently asked questions
What is a mortgage recast?
Paying a lump sum toward the principal and having the lender recalculate your payment so the loan still ends on its original date. On a 280,000 dollar balance with 300 months left, paying 50,000 and recasting lowers the payment from 1,890 to 1,552.98 dollars. The rate and term do not change.
Should I recast my mortgage or just pay extra?
Recast if you need a lower monthly payment. Keep paying the same amount if you do not. On the example on this page, recasting saves 51,185 dollars of interest while keeping the payment saves 89,663 — a difference of 38,478 dollars, which is what the lower payment costs you.
How much does a recast cost?
Usually a few hundred dollars, commonly 150 to 500. Against a 337 dollar monthly reduction that repays itself in the first month, so the fee is almost never the deciding factor. Some lenders waive it entirely.
Does a recast hurt my credit score?
No. A recast is not a new loan, so there is no credit inquiry and no new account. Reducing the balance faster also improves your loan-to-value ratio over time, which helps if you later refinance or apply for a home equity line.
Can I recast more than once?
Usually yes, if the lender allows it, though each recast carries its own fee and some lenders limit how often it can be done. If you expect several lump sums over the years, ask about the rules before the first one rather than after.