Mortgages

Cash-Out Refinance Calculator

A cash-out refinance replaces your mortgage with a bigger one and hands you the difference. The cash is cheap compared with a credit card, but you are borrowing it over decades and often trading a low old rate for a higher new one on the entire balance.

Tested against worked examplesHow we verify

Home value

Current mortgage balance

Current rate

Months left on current loan

Cash you want

New rate

New term

Closing costs

Cash in hand

$50,000

Your loan becomes $308,000 at 6.500%.

The extra interest over the loan's life exceeds the cash you take out. Refinancing a low rate to a higher one applies that higher rate to the whole balance, not just the cash — often the hidden cost that makes a HELOC cheaper for a modest sum.

New monthly payment: $1,947
Current payment: $1,515
Payment increase: $432
New loan-to-value: 61.6%
Total interest on the new loan: $392,837
Extra lifetime interest vs not refinancing: $279,249

Old balance$250,00081%

Cash out$50,00016%

Rolled-in costs$8,0003%

Compare scenariosTry three values of one input

Vary

Cash-Out Refinance Calculator results for three values of Home value
Home value
Cash in hand	$50,000	$50,000	$50,000
New loan-to-value	68.44%	61.6%−6.84%	56%−12.44%

Every other input stays at the value you set above — currently $500,000 for home value. Differences are measured against the first column.

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How this calculator works

The new loan is the current balance plus the cash out plus any rolled-in closing costs. Payments are standard amortisations of the old balance over its remaining term and the new loan over the new term. Extra lifetime interest compares total interest on the new loan against the interest remaining on the current one — so a longer term or higher rate shows up as a cost even when the payment falls.

Rate and term are yours to enter; a real quote depends on credit, the loan-to-value shown here, and whether it is owner-occupied. Private mortgage insurance above 80% LTV, points, and the tax treatment of the interest are not modelled. Compare the extra interest here against a HELOC before deciding.

What this assumes

The new loan replaces the old one entirely — you are re-borrowing the remaining balance at today's rate, not just the cash taken out.
Closing costs are paid up front rather than rolled in.
Lenders cap total borrowing as a share of the home's appraised value, and the appraisal is not guaranteed to match your estimate.

What changes this number

Rate difference on the whole balance: If today's rate is above your current one, the cash costs far more than its headline rate implies, because the entire balance reprices.
Amount taken out: Increases the payment permanently. The comparison worth making is against a home equity loan that leaves the first mortgage alone.
What the money is for: Not modelled, and decisive: this converts unsecured debt into debt secured by your home.

A worked example

Take the $50k out, 4% to 6.5% scenario. These figures are produced by the calculator above, not written alongside it, so they always match what the tool returns.

What you enter

Current mortgage balance: $250,000
Current rate: 4%
Cash you want: $50,000
New rate: 6.5%

What it returns

Cash in hand: $50,000
New monthly payment: $1,947
Current payment: $1,515
Payment increase: $432
New loan-to-value: 61.6%

Try an example

$50k out, 4% to 6.5%Rate barely changes Large cash-out

Frequently asked questions

How does a cash-out refinance work?

You replace your existing mortgage with a larger one and receive the difference in cash. Owe $250,000, refinance into $300,000, and you walk away with roughly $50,000 before costs. The whole balance is now at the new rate and term.

Cash-out refinance or HELOC?

A HELOC or home equity loan leaves your first mortgage alone and charges the new rate only on what you borrow. A cash-out refi resets the entire balance to the new rate. If your existing rate is well below current rates, the refi's higher rate on the whole balance usually costs far more than the second loan.

How much can I cash out?

Most lenders cap a cash-out refinance at 80% of the home's value, counting the new loan. On a $500,000 home that is a $400,000 loan, so if you owe $250,000 you could take up to about $150,000 before costs. VA loans and some programs allow more.

Is the cash taxable?

No. Borrowed money is not income, so the cash-out proceeds are not taxed. Interest is only deductible when the money is used to buy, build, or substantially improve the home securing the loan, and only if you itemise — using it to consolidate debt or invest does not qualify.

When does a cash-out refinance make sense?

When your current rate is close to or above market rates, so resetting the balance costs little, and you have a high-value use for the cash — a renovation that adds value, or clearing debt at a much higher rate. It rarely makes sense purely to lower a payment by extending the term.

This calculator helps answer

Should I refinance my mortgage?

The break-even test everyone teaches can approve a refinance that costs you more than doing nothing. Here is the comparison that actually decides it.