What Is a Mortgage Recast Calculator?
A mortgage recast calculator estimates how a lump-sum principal payment could lower your required monthly mortgage payment. In a recast, the lender takes your reduced loan balance and re-amortizes it over the remaining term. The loan usually keeps the same interest rate, same maturity date, and same servicer. That makes recasting different from refinancing, where a new loan replaces the old loan.
The practical question is not only whether the payment drops. A homeowner also needs to compare the lower-payment benefit with the faster-payoff alternative. If you send the same lump sum and keep paying the old payment, the loan can end earlier and save more interest. If you recast, the required payment falls, which can help monthly cash flow, but the payoff schedule stays closer to the original term.
How to Calculate a Mortgage Recast
First, calculate the current principal and interest payment from the current balance, annual interest rate, and remaining months. Next, subtract the lump-sum principal payment from the current balance. Then calculate a new payment on that smaller balance using the same rate and same remaining months. The difference between the old payment and new payment is the estimated monthly payment reduction.
This calculator also estimates interest saved with recast, interest saved without recast, and the interest tradeoff. The no-recast comparison matters because both strategies use the same principal payment, but one reduces the required payment while the other keeps the old payment and accelerates payoff.
Worked Examples
Cash-flow recast
Suppose you owe $360,000 at 6.75% with 25 years remaining and apply a $50,000 lump sum. The new balance is $310,000. The recast payment falls from about $2,486 to about $2,140 before escrow, creating roughly $346 of monthly cash-flow relief.
No-recast alternative
If you apply the same $50,000 to principal but keep paying the old required payment, the loan pays down faster. That path usually saves more interest, but it does not lower the payment you must make every month.
When a Recast Is Useful
A recast can make sense after selling another property, receiving a bonus, inheriting cash, or deciding to put excess savings into a mortgage while keeping monthly obligations lower. It can be especially useful for borrowers who like their current interest rate and do not want refinance closing costs or underwriting.
A recast is less attractive when the main goal is maximum interest savings. In that case, the borrower may prefer to apply extra principal and keep making the old payment. It can also be unavailable or uneconomical if the lender does not allow recasting, requires a high minimum principal payment, or charges a fee that is large compared with the payment reduction.
Frequently Asked Questions
What is a mortgage recast?
A mortgage recast is when a lender re-amortizes your remaining mortgage balance after you make a large principal payment. The interest rate and remaining term usually stay the same, but the required monthly principal and interest payment drops.
How does this mortgage recast calculator work?
The calculator estimates your current principal and interest payment from the current balance, rate, and remaining term. It subtracts the lump-sum principal payment, recalculates payment over the same remaining term, and compares the new payment with the old payment.
Does a mortgage recast save interest?
Yes, the lump-sum principal reduction can reduce total interest because the future interest is charged on a smaller balance. However, if you recast and lower the payment, you usually save less interest than if you applied the lump sum and kept paying the old payment.
Is a mortgage recast the same as refinancing?
No. A recast keeps the existing loan, interest rate, and remaining term in place. A refinance replaces the old loan with a new loan and may involve a new rate, new term, closing costs, underwriting, and a new payoff schedule.
What inputs do I need for a recast estimate?
You need your current mortgage balance, annual interest rate, remaining loan term, planned lump-sum principal payment, estimated recast fee, and monthly escrow if you want to see the full payment including taxes and insurance.
Can every mortgage be recast?
No. Recast availability depends on the loan type and mortgage servicer. Some conventional fixed-rate loans allow recasting, while some government loans, adjustable-rate loans, or investor-owned loans may have restrictions.
Should I recast or pay extra without recasting?
Recasting is useful when you want lower required monthly payments and more cash-flow flexibility. Paying the same lump sum without recasting can shorten the payoff schedule and save more interest if you can keep making the old payment.
Does escrow change after a recast?
This calculator keeps escrow separate because property tax and insurance usually do not change just because the loan is recast. Your servicer may still update escrow after a separate escrow analysis.