Would refinancing actually save you money? See the break-even point.
Refinancing, also called remortgaging, replaces your existing loan with a new one, usually to get a lower interest rate, but the savings are not automatic. A lower rate reduces the interest portion of every payment, but refinancing typically resets the amortization schedule and often comes with closing costs that need to be recovered before you come out ahead.
Compare total remaining interest on your current loan against total interest plus closing costs on the new one, using the same remaining time horizon for both. If refinancing shortens or holds your remaining term steady while lowering the rate, it almost always saves money. If it extends your term significantly, it can go either way depending on how much the rate actually drops.
Yes, as a figure you enter. They are added to the total cost of the new loan, which is why a lower monthly payment can still come out more expensive overall.
The monthly payment alone hides this. Stretching a balance back out over a longer term lowers what you pay each month while raising the total interest paid over the life of the loan, and the closing costs sit on top of that.
Refinancing (also called remortgaging) replaces your existing loan with a new one, usually to get a lower interest rate, but the savings aren't automatic. A lower rate reduces the interest portion of every payment, but refinancing typically resets the amortization schedule and often comes with closing costs that need to be recovered before you come out ahead.
The rate-drop vs. term-tradeoff is the key tension: refinancing into a new loan with the same remaining term as your old one is close to a pure win if the rate drops meaningfully. But refinancing into a fresh full-length term (e.g. resetting a mortgage back to 30 years after already paying down 8) can lower your monthly payment while actually increasing total interest paid, because you're stretching a smaller balance over more years of interest accrual.
The simplest way to check if it's worth it: compare total remaining interest on your current loan against total interest plus closing costs on the new one, using the same remaining time horizon for both. If refinancing shortens or holds your remaining term steady while lowering the rate, it almost always saves money; if it extends your term significantly, it can go either way depending on how much the rate actually drops.