Recast vs Extra Payments Calculator
Compare two strategies for your lump sum: mortgage recast (lower monthly payment, same term) vs extra payment (same payment, pay off years sooner). See the interest savings side-by-side.
Using $30,000 lump sum + $400/mo extra. Which strategy saves more total interest?
Year-by-year balance applying annual bonus ($8,000) and tax refund ($4,000) to principal.
| Year | Lump Sums Applied | Remaining Balance | Cumulative Interest |
|---|---|---|---|
| Year 1 | $12,000 | $303,678 | $21,468 |
| Year 2 | $10,000 | $288,220 | $41,799 |
| Year 3 | $10,000 | $271,686 | $61,055 |
| Year 4 | $10,000 | $254,001 | $79,159 |
| Year 5 | $10,000 | $235,084 | $96,031 |
| Year 6 | $10,000 | $214,850 | $111,586 |
| Year 7 | $10,000 | $193,207 | $125,733 |
| Year 8 | $10,000 | $170,057 | $138,373 |
| Year 9 | $10,000 | $145,295 | $149,400 |
| Year 10 | $10,000 | $118,809 | $158,704 |
How to Use This Calculator
This calculator provides a true head-to-head comparison of two strategies for using a lump sum on your mortgage: recasting (lower monthly payment, same term) vs. extra payment (same payment, faster payoff).
Quick Calculator
Enter your Current Loan Balance, Interest Rate, Years Remaining, and Lump Sum Amount. The calculator instantly shows both strategies side-by-side — the recast produces a lower monthly payment while the extra payment accelerates your payoff date. Both save interest, but typically by different amounts.
Advanced Tier
The Strategy Comparison tab adds ongoing monthly extra payments to both strategies. Hybrid Approach models the best of both worlds — recast first for cash flow relief, then continue extra payments. Cash Flow Need helps you decide which strategy fits your current budget situation.
Pro Tier
The Multi-Lump Schedule models annual bonus and tax refund applications. Investment Alternative compares mortgage paydown to investing the lump sum. Recast Eligibility checks whether your loan type qualifies.
Recast and Extra Payment Formulas
New Balance = Current Balance − Lump Sum
New Payment = PMT(rate/12, remaining months, New Balance)
Monthly Savings = Current Payment − New Payment
EXTRA PAYMENT — New Payoff Timeline:
Payoff Months = log(Payment / (Payment − Balance × r)) / log(1+r)
Where Payment = Original Payment (unchanged)
Balance applied = Current Balance − Lump Sum
Interest Saved = Total Interest (No Action) − Total Interest (Strategy)
The key mathematical insight is that recasting lowers your required payment (reducing cash flow risk) while extra payments accelerate principal reduction (maximizing interest savings). For wealth building, extra payments almost always win. For cash flow flexibility, recasting wins.
Example: $30,000 Lump Sum on a $320,000 Mortgage
Balance: $320,000 | Rate: 6.75% | 27 Years Remaining
| Current Monthly Payment | $2,073 |
| Total Interest (No Action) | $371,000 |
| RECAST: Apply $30,000 to Principal | |
| New Balance | $290,000 |
| New Monthly Payment | $1,879 |
| Monthly Savings | $194/mo |
| Interest Saved | ~$48,000 |
| EXTRA PAYMENT: Apply $30,000 + Keep Same Payment | |
| New Balance to Pay Down | $290,000 |
| Monthly Payment | $2,073 (unchanged) |
| Years Saved | ~3 years 8 months |
| Interest Saved | ~$68,000 |
In this example, the extra payment strategy saves approximately $20,000 more in interest than the recast. The recast provides $194/month in cash flow relief — worth it if your budget is tight or income uncertain.