Refinance Home to Pay Off a Personal Loan?

This calculator estimates the monthly payment and total interest on a fixed-rate home refinance using the loan amount, APR, and term you enter. To explore refinancing a personal loan, enter the proposed new mortgage balance, including any debt you plan to roll in; the results are arithmetic estimates, not a comparison of whether the refinance saves money.

Formula

The calculator uses the standard fixed-payment loan formula. Monthly payment = P × r ÷ [1 − (1 + r)⁻ⁿ], where P is the new loan amount in dollars, r is the monthly interest rate (APR ÷ 1,200), and n is the number of monthly payments (years × 12). Total interest = monthly payment × n − P. The payment is displayed to cents; the total-interest output uses that displayed payment and the full number of scheduled payments.

For example, the amount P should represent the principal of the proposed refinance—not merely the balance of the personal loan. If a refinance also pays off an existing mortgage or includes financed costs, those amounts affect the new principal and belong in the amount only if they are part of the proposed borrowing. Obtain actual loan figures from the lender before using them in an estimate.

Worked Example

Using the calculator defaults: P = $20,000, APR = 8%, and term = 5 years.

• Monthly rate: 8 ÷ 1,200 = 0.0066667.
• Number of payments: 5 × 12 = 60.
• Monthly payment: 20,000 × 0.0066667 ÷ [1 − (1 + 0.0066667)⁻⁶⁰] = $405.53, rounded to cents.
• Total interest using the displayed payment: $405.53 × 60 − $20,000 = $4,331.80.

Assumptions

• The interest rate stays fixed for the full term.
• Payments are equal monthly payments, made at the end of each monthly period.
• Interest accrues monthly at APR ÷ 12; the calculation does not model daily interest or changing rates.
• Fees, taxes, insurance, property costs, and any mortgage insurance or escrow are not included.
• The calculation assumes the entered amount is the full principal and that all scheduled payments are made as planned.

Can You Refinance a Home to Pay Off a Personal Loan?

It may be possible to use a mortgage refinance to borrow enough to pay off a personal loan, if the proposed mortgage and lender arrangements allow it. This changes unsecured personal debt into debt secured by the home: the home is collateral for the mortgage. The calculator above estimates payments on a single new loan, but it does not determine eligibility, account for the existing mortgage payoff, or decide whether this transaction reduces your overall cost.

A refinance replaces an existing mortgage with a new mortgage. If the new borrowing exceeds the amount needed to pay off the old mortgage and transaction costs, the difference may be available as cash, depending on the product and terms. That cash could be used to settle a personal loan. The amount to model is the entire new mortgage principal, not just the cash-out portion. If the personal loan is being added to an existing mortgage balance, compare the full proposed loan with the full amount currently owed.

What to Compare Before Calculating

A lower monthly payment alone does not establish that the debt costs less. A mortgage may run for many more years than a personal loan, so a smaller payment can accompany more interest over time. For a meaningful comparison, collect written figures for both the current debts and the proposed refinance, then examine the full repayment period and upfront costs.

• Record the personal loan’s payoff amount, remaining term, payment, and remaining interest according to its current terms.
• Record the current mortgage payoff and any other balances that would be included in the new loan.
• Ask for the proposed refinance’s principal, APR, term, monthly payment, fees, and any costs paid at closing or added to the balance.
• Compare total payments and interest over a consistent period, and account separately for costs that are not included in the calculator.
• Check whether the new loan has a variable rate, a different payment schedule, or terms that change the result over time.

For example, a personal loan with only a few years left could be replaced by a mortgage that lasts decades. The refinance payment attributable to that debt might look smaller each month, while interest on the borrowed amount continues for longer. Conversely, comparing only a mortgage’s new total payment with the personal-loan payment would be misleading because the mortgage payment also covers the home loan. Isolate the added borrowing and its costs when possible, while recognizing that an actual mortgage may not separate those amounts cleanly.

Costs, Risks, and Calculator Limits

Refinancing can involve lender and closing costs, and adding costs to the principal means paying interest on them as well. The calculator has no fee input, so it will understate borrowing costs if those charges are omitted from the amount or evaluated separately. It also does not model the old mortgage’s remaining interest, early payoff details, or a change in the home’s equity.

Using home-secured borrowing to pay personal debt changes the consequences of missed payments. A personal loan is generally not secured by the home, whereas a mortgage is secured by property. A borrower should understand the mortgage’s payment obligations and consequences described in its documents; this calculator cannot assess those risks. Avoid treating home equity as cost-free cash: borrowing against it increases debt secured by the property.

APR and payment figures can be affected by loan structure and costs. Enter the proposed APR and term supplied for the specific offer, rather than assuming a rate. The formula is for a level-payment loan with a fixed rate; it does not calculate lender approval, changing rates, tax effects, legal consequences, or whether one option fits a household’s circumstances.

Alternatives to a Mortgage Refinance

Other ways to address personal-loan debt may include continuing the current repayment schedule, asking the lender about available payment arrangements, or comparing other borrowing options. Each option can have different costs, collateral, terms, and risks. This page does not rank or recommend them. Compare the written terms, total repayment, and consequences of missed payments, and seek qualified help if you need guidance specific to your situation.

Frequently Asked Questions

Does refinancing a mortgage automatically pay off a personal loan?
No. The personal loan is paid only if the refinance proceeds are sufficient and the transaction is arranged to direct funds to its payoff. Confirm the amount and payoff process with the parties handling the loans.

Will rolling a personal loan into a mortgage lower my total interest?
Not necessarily. The result depends on the new APR, fees, principal, and repayment term. A longer term can reduce monthly payments but extend the time interest accrues; compare total costs using actual figures.

Does this calculator include refinance closing costs?
No. It calculates payments and interest from the principal, APR, and term entered. Ask for a detailed cost estimate and account for costs paid upfront or added to the new balance.

Should I enter just the personal-loan balance?
Use the full principal of the proposed new loan for this calculator. A refinance normally also addresses an existing mortgage payoff, and the personal-loan balance is only one possible component of the total borrowing.

Is home equity the same as cash I already own?
No. Home equity is the difference between a home’s value and debts secured by it; borrowing against equity creates a loan secured by the home. This calculator does not estimate equity or determine how much a lender may offer.

This result is an estimate, and the lender’s disclosure gives the exact figures.

Related

• Auto Loan Refinance Calculator: Payment and Interest
• Auto Loan Refinance Interest Rates and Payment Calculator
• Auto Loan Refinance Calculator: Compare Payments

in p | New 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