Refinance Calculator With a Personal Loan

This calculator estimates the monthly payment and total interest on a fixed-rate personal loan, which you can compare with the costs of refinancing a home loan. Enter the amount, APR, and term to see the loan’s payment and interest; it does not calculate mortgage payoff costs or determine whether a lender will approve a loan.

Formula

The calculator uses the standard fixed-payment loan formula. Monthly payment equals the loan principal multiplied by the monthly interest rate, divided by one minus the quantity one plus that rate raised to the negative number of monthly payments:

Payment = P × r / [1 − (1 + r)⁻ⁿ]

• P is the amount borrowed, in dollars.
• r is the monthly interest rate, calculated as the annual percentage rate divided by 1,200. For an 8% APR, r = 0.08 / 12.
• n is the number of monthly payments, calculated as years multiplied by 12.

Total interest is the rounded monthly payment multiplied by the number of payments, minus the original principal: Total interest = payment × n − P. The displayed payment is rounded to the nearest cent before the total is calculated, so the total reflects that rounded payment. Because of rounding, the final payment on a real loan may differ slightly.

Worked Example

Using the default inputs—$20,000 principal, 8% APR, and five years—the monthly rate is 0.08 / 12 = 0.0066667, and the term is 5 × 12 = 60 monthly payments.

Payment = 20,000 × 0.0066667 / [1 − (1 + 0.0066667)⁻⁶⁰] = $405.53 per month, rounded to cents.

Total interest = $405.53 × 60 − $20,000 = $4,331.80.

Assumptions

• The APR is fixed for the full term, and payments are equal monthly payments.
• Payments are modelled as monthly installments; the calculation does not specify a particular calendar due date.
• Interest compounds monthly at APR / 12.
• Fees, taxes, insurance, mortgage insurance, escrow, and other charges are not included.

Can a Personal Loan Refinance a Home Loan?

A personal loan can provide money that a borrower might use to pay down or pay off a mortgage, but that is not the same as replacing a mortgage with a new mortgage. The calculator above models only the personal loan’s payment and interest. It does not establish that the loan proceeds will cover a mortgage payoff, remove a lien, change property ownership, or meet a lender’s requirements.

For a comparison, first find the exact mortgage payoff amount for a specified date and the amount needed to cover any other debts or costs. Then enter the amount you would actually borrow, the personal loan APR supplied by a lender, and its proposed term. Compare the resulting payment and interest with the remaining mortgage costs, while accounting separately for transaction charges and any differences in repayment period.

A lower monthly payment by itself does not show that borrowing costs less overall. A longer term can reduce a monthly payment while increasing the total interest paid. Conversely, a shorter term can raise the payment while reducing the number of months interest accrues. These calculations are only comparable when their amounts, timing, and included costs are understood.

What to Compare Beyond the Monthly Payment

Mortgage and personal-loan structures can differ, so compare the details in the relevant lender disclosures rather than treating the calculator’s result as a complete quote. Check:

• Amount financed: Use the actual amount borrowed, not just the current mortgage balance. A payoff figure may differ from a balance shown on a statement.
• APR and fees: Enter the APR quoted for the personal loan. Ask how any origination or other charges are handled; this calculator does not add them to the principal or payment.
• Term and payment schedule: Confirm the number of payments and whether the quoted payment is fixed. This estimate assumes monthly installments at a fixed rate.
• Remaining mortgage costs: Compare the personal loan’s total cost with the costs of keeping the existing mortgage or refinancing it through a mortgage product. Include relevant charges and any applicable prepayment terms from the documents.
• Collateral and consequences: A personal loan and a mortgage may involve different security arrangements and consequences if payments are missed. Read the contract and seek qualified advice for questions about your situation.

Limits and Common Calculation Mistakes

This is a payment estimator, not a mortgage payoff calculator, refinance quote, eligibility check, or recommendation. It cannot determine a lender’s approval decision, the actual APR or fees available to a borrower, or how paying off a mortgage affects the rights associated with the home. Get real rates, payoff figures, and charges directly from the relevant lender or servicer.

Common errors include entering a mortgage balance when the amount needed to borrow is different, typing 8 instead of 0.08 when the calculator asks for APR in percent, and comparing monthly payments without comparing terms. The calculator expects APR as a percentage number, such as 8 for 8%, and the loan term in years. Its formula also assumes a rate above zero, a fixed rate, and level monthly payments; adjustable rates, irregular payments, and added charges are outside the model.

Do not assume that using personal-loan funds automatically changes the mortgage contract or releases a claim against the property. Confirm how a payoff must be made and documented with the mortgage servicer, and review the applicable loan documents. This arithmetic does not address legal or tax questions.

Frequently Asked Questions

Can I use a personal loan to pay off my mortgage?
A personal loan may provide funds someone intends to use for a mortgage payoff, but whether a lender permits the borrowing and how the payoff must be completed depend on the loan terms and lender requirements. Confirm the details with both lenders.

Does this calculator show whether I save money?
No. It estimates a personal loan’s payment and interest from the inputs. A full comparison also needs the mortgage payoff amount, remaining mortgage costs, fees, and the terms of each option.

Does refinancing with a personal loan remove the mortgage lien?
The calculator cannot determine that. Do not treat a payment or payoff estimate as proof that a mortgage has been discharged; confirm the process and documentation with the mortgage servicer.

Why can a lower payment cost more overall?
A longer repayment term can spread payments over more months. Even if the monthly amount is lower, interest may accumulate for longer; compare total costs as well as payments.

Are fees included in the result?
No. The payment and interest estimates exclude fees, taxes, insurance, mortgage insurance, and escrow. Check the lender’s disclosure for charges and exact figures.

This result is an estimate for education; the lender’s disclosure gives the exact figures.

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in p | Loan amount | $ | 20000 | 1 | 100000000
in apr | Interest rate (APR) | % | 8 | 0.01 | 100
in yrs | Loan term | years | 5 | 0.0833 | 50
out pmt | Monthly payment | $ | p * (apr / 1200) / (1 - (1 + apr / 1200) ^ -(yrs * 12)) | 2
out int | Total interest | $ | pmt * yrs * 12 - p | 2