Refinance a Home Equity Loan? Payment Calculator

This calculator estimates the monthly payment and total interest for a new, fixed-rate loan used to refinance a home equity loan. Enter the amount being refinanced, the new loan’s APR, and its term; compare the estimate with your current loan’s remaining payments and any costs quoted by a lender.

Formula

The calculator applies the standard level-payment loan formula. It converts the annual percentage rate to a monthly rate, then spreads repayment of the principal and interest across the number of monthly payments.

• P is the new loan amount in dollars.
• APR is the annual percentage rate entered as a percentage, such as 8 for 8%.
• r is the monthly rate, calculated as APR ÷ 1,200.
• n is the number of monthly payments, calculated as years × 12.
• Payment = P × r ÷ [1 − (1 + r)⁻ⁿ].
• Total interest = (monthly payment × n) − P.

The displayed monthly payment is rounded to the nearest cent. Total interest is calculated using that rounded payment, so it reflects the estimate’s payment rounding. The calculation assumes that the entire loan amount is repaid through equal monthly payments.

Worked Example

Using the defaults—$20,000 borrowed, 8% APR, and a five-year term—the monthly rate is 8 ÷ 1,200 = 0.0066667, and the term is 5 × 12 = 60 payments.

1. Payment = 20,000 × 0.0066667 ÷ [1 − (1 + 0.0066667)⁻⁶⁰].
2. The resulting payment, rounded to cents, is $405.53 per month.
3. Total interest = ($405.53 × 60) − $20,000 = $4,331.80.

These figures represent the calculator’s formula and defaults, not a quote. A lender’s payment can differ if the final principal, rate, payment schedule, or fees differ.

Assumptions

• The interest rate is fixed for the full modeled term.
• Payments are equal, made monthly, with the first payment one month after the loan begins.
• Interest is modeled with monthly compounding at APR ÷ 12.
• The calculation excludes closing costs, other fees, taxes, insurance, PMI, and escrow. It also does not model a changing rate, late payments, or an irregular final payment.

What Refinancing a Home Equity Loan Means

A home equity loan is generally a lump-sum loan secured by a home, with repayment terms set in a loan agreement. Refinancing means replacing that existing debt with a new loan. The new loan may have a different balance, APR, repayment term, or payment schedule. The calculator estimates the scheduled payment and interest for the new loan; it does not decide whether replacing the old loan reduces the overall cost.

The amount refinanced is not necessarily the original amount borrowed. It may be the payoff amount on a particular date, which can include accrued interest or other amounts described in the lender’s payoff statement. If costs are added to the new balance, the amount entered should reflect that higher principal. Ask for an itemized quote and confirm what amount the new loan would actually cover.

How to Compare the New Loan With the Existing One

A lower monthly payment alone does not establish that refinancing costs less. A longer repayment term can lower the scheduled payment while keeping debt outstanding for more months and increasing total interest. For a useful comparison, collect the current loan’s payoff amount, remaining payment count, payment amount, and any costs associated with replacing it.

• Compare the estimated new payment with the current required payment.
• Compare remaining payments on the current loan with payments over the full new term.
• Include any fees paid upfront or added to the new balance; this calculator does not include them.
• Check whether either loan has a variable rate, a balloon payment, or other terms the fixed-payment estimate cannot represent.

For example, stretching repayment from a shorter remaining schedule into a longer new term can produce a smaller monthly bill even if the new loan accrues more interest overall. Compare both the cash-flow timing and the total amounts, using lender disclosures for exact figures. Avoid comparing the new loan’s projected total interest with the old loan’s original total interest: much of the old loan may already have been paid.

Costs, Risks, and Limits

Refinancing can involve costs that are separate from principal and interest. Depending on the particular transaction, a lender may quote fees or other charges; their amount and treatment must come from that lender, not this calculator. Costs paid out of pocket affect cash available, while costs added to principal increase the balance on which interest is calculated. Entering only the old loan’s payoff amount will not reflect costs rolled into the new loan.

A home equity loan is secured by the home. Falling behind on payments can have serious consequences, including risk to the property under the loan’s terms. The calculator does not evaluate income, household budget, creditworthiness, property value, eligibility, or approval. It does not predict a lender’s offered APR or costs; use the actual figures in a written quote rather than treating the example defaults as market estimates.

Rounding also matters. The calculator rounds the monthly payment to cents and uses that rounded amount to estimate total interest. Actual servicing may use a different payment schedule, and the final payment may be adjusted to clear a small remaining balance. Read the lender’s repayment schedule and disclosure for the contract figures.

When This Estimate Is Useful

Use the calculator to understand how principal, APR, and term affect a modeled fixed monthly payment. You can change one input at a time to see how the estimate moves, then compare scenarios using figures supplied by a lender. It is not a complete refinance comparison unless you separately account for the current loan’s remaining payments and all new-loan costs.

Before comparing offers, verify that the quoted APR, loan amount, term, and payment frequency match the calculator inputs. Confirm whether the quoted payment includes only principal and interest or also other charges. Keep the lender’s payoff statement and written loan disclosures available: those documents contain transaction-specific figures this estimate cannot supply.

Frequently Asked Questions

Can I refinance a home equity loan?
In general, refinancing means paying off an existing home equity loan with a new loan secured by the home. Whether a lender will offer a particular transaction depends on its assessment and terms; this calculator does not determine eligibility.

Does refinancing a home equity loan lower the payment?
It may, depending on the new principal, APR, and term. A longer term can reduce the monthly payment while increasing the time spent repaying; compare total scheduled payments and costs as well as the monthly amount.

Does this calculator include refinance fees?
No. It estimates principal-and-interest payments only. Get an itemized lender quote, and account separately for costs paid upfront or added to the loan balance.

Should I enter the original loan amount or its payoff amount?
For an estimate of a replacement loan, use the new loan amount being considered. That may be based on the existing loan’s current payoff figure, with any costs included only if they will be financed.

Can I refinance a home equity loan into a mortgage?
A different loan structure may be offered in some circumstances, but this calculator models only a single fixed-rate loan with equal monthly payments. It does not compare loan types or account for their specific costs and terms.

This result is an estimate; 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