Cash Out Refinance
Free cash out refinance calculator to compare current vs new loan payments. Estimate monthly costs, cash received, interest savings, and break-even period.
Current Mortgage
Cash-Out Refinance
About This Calculator
What is a cash out refinance?
A cash out refinance replaces your existing mortgage with a new loan for a larger amount. You receive the difference between the new loan and your current mortgage balance as cash at closing. This is a popular strategy for homeowners looking to access their home equity for home renovations, debt consolidation, education expenses, or major purchases.
The calculator compares your current loan against a proposed cash-out refinance. It uses the standard EMI formula to compute monthly payments for both loans, then calculates the total interest paid over each loan's full term. The amortization schedule shows how the loan balances decline year by year, and the break-even analysis tells you how many months it takes for monthly savings to recoup your closing costs.
Regional notes
India: Banks typically allow LTV up to 75-90% of property value for home loans. Interest on loans used for renovation qualifies for tax deduction under Section 24 up to ₹2 lakh. Processing fees range from 0.25% to 1% of the loan amount. Loan tenure typically extends up to 30 years.
US: Most lenders cap cash-out refinance at 80% LTV. Closing costs average 2-5% of the loan amount ($4,000-$8,000). Interest may be tax deductible if proceeds are used for home improvements (consult a tax advisor). FHA cash-out refinances allow up to 85% LTV but require MIP.
UK: Also known as mortgage equity withdrawal. Lenders typically allow borrowing up to 75-85% LTV. Early repayment charges may apply if you are still in a fixed-rate period. Stamp duty may apply if the loan amount crosses certain thresholds. Interest rates on cash-out refinances may be slightly higher than standard rate switches.
Frequently Asked Questions
What is a cash out refinance?
A cash out refinance replaces your existing mortgage with a new larger loan. You receive the difference between the new loan amount and your current mortgage balance in cash, which you can use for home improvements, debt consolidation, or other expenses.
How much cash can I take out when refinancing?
Most lenders allow you to borrow up to 80% of your home's value through a cash out refinance. For example, if your home is worth $300,000 and you owe $180,000, you could potentially take out up to $60,000 in cash. In India, LTV limits vary by loan amount from 75% to 90%.
Is cash out refinance tax deductible?
In the US, interest on a cash out refinance may be tax deductible if the funds are used for home improvements. In India and the UK, interest on home loans used for repairs or renovations qualifies for tax benefits under certain conditions. Consult a tax professional for your specific situation.
What is the difference between a cash out refinance and a home equity loan?
A cash out refinance replaces your entire mortgage with a new loan at a new rate, while a home equity loan is a separate second loan that leaves your existing mortgage intact. Cash out refinancing typically offers lower rates since it is a first mortgage.
What are the closing costs for a cash out refinance?
Closing costs for a cash out refinance typically range from 2% to 5% of the loan amount and include appraisal fees, origination fees, title insurance, and recording fees. In the US, the average closing cost is around $4,300. In India, processing fees range from 0.25% to 1% of the loan amount.
How long does it take to complete a cash out refinance?
A typical cash out refinance takes 30 to 45 days from application to closing. The timeline depends on the lender, property appraisal, and how quickly you provide required documentation. Some digital lenders offer faster 15-21 day closures.
Is cash out refinance a good idea?
Cash out refinance can be a good idea if you use the funds for home improvements that increase property value, consolidate high-interest debt, or fund education. However, it increases your loan balance and may extend your repayment term. Compare the new monthly payment and total interest before proceeding.