Cash-Out Refinance Calculator | Compare Tapping Equity vs. a Separate Loan

Compare a cash-out refinance, where you take a new mortgage larger than your current balance to receive the difference in cash, against keeping your current loan and borrowing the same amount through a separate loan.

Cash-Out Refinance Break-Even by Separate Loan Rate

Estimates based on a current balance of $300,000 at 7.00% with 25 years remaining, a $50,000 cash-out amount, a new loan at 6.50% for 25 years, $6,000 in closing costs, and a 10-year separate loan term.

Separate Loan Rate Cash-Out Refinance Monthly Payment Keep + Separate Loan Monthly Payment (Combined) Estimated Refinance Savings
7.00% $2,363 $2,701 −$9,201
9.00% $2,363 $2,754 −$2,861
12.00% $2,363 $2,838 $7,216
15.00% $2,363 $2,927 $17,935

Tips for Weighing a Cash-Out Refinance

  • The higher the rate on a separate loan, the more a cash-out refinance tends to win on total cost. Always compare against real personal loan or credit card rates.
  • Your new loan balance will be larger than your current one, which resets the payoff clock on the whole mortgage. Check the change in total cost to payoff, not just the monthly payment.
  • Lenders usually cap cash-out refinances at a loan-to-value limit, often around 80%. Confirm your desired cash-out amount fits within that limit before applying.
  • Closing costs apply every time you refinance. If you only need a small amount of cash, a separate loan with lower fees can sometimes cost less overall.

Cash-Out Refinance FAQ

It depends. A cash-out refinance replaces your entire mortgage at a new rate, so if that new rate is much higher than your current one, you end up paying more interest on your existing balance too. A HELOC leaves your existing mortgage untouched and only borrows the cash-out amount, which tends to be favorable when your current mortgage rate is already good.

A rough guideline is your home's appraised value multiplied by the lender's loan-to-value limit (often around 80%), minus your current loan balance. The exact limit depends on underwriting, so confirm with your lender in advance.

Some lenders let you finance closing costs into the new loan, but that amount also accrues interest. This tool assumes closing costs are paid in cash, so if you plan to finance them, add that amount to your cash-out amount for a more conservative estimate.

Yes. If a separate loan option (personal loan, credit card, etc.) carries a much higher rate than mortgages typically do, a cash-out refinance can still win on total cost even with a modest rate increase on the whole balance. Always check the total cost comparison in the table above rather than relying on rate alone.
ツールくん

Side Note — Two Ways to Turn Home Equity Into Cash

A cash-out refinance replaces your existing mortgage with a new, larger loan and pays you the difference in cash. The new loan pays off the old one, and the remainder is yours to use freely. The more your home's appraised value has grown, the larger the amount you can typically borrow.

A related option is a HELOC (home equity line of credit). Instead of replacing your mortgage, a HELOC leaves it untouched and opens a separate credit line against your equity. The "separate loan" comparison in this tool stands in for HELOCs, personal loans, or any option that doesn't require touching your existing mortgage.

Which option wins depends on how the new refinance rate compares to your current rate, and how that gap stacks up against the separate loan's rate. If the new rate is much higher than your current one, refinancing the whole balance can add cost across your entire loan, making a separate loan the better deal. Compare the total cost side by side here, and check loan-to-value limits and closing costs with your lender before deciding.

Browse all trivia

People who viewed this tool also viewed

Home Loan Calculator

Enter the loan amount, interest rate, and loan term to calculate the monthly payment, total repayment, and total interest. Supports the equal principal-and-interest repayment method.

Mortgage Refinance Calculator — Break-Even & Total Savings

Compare your current mortgage with a refinance. Estimate monthly savings, remaining interest, closing-cost break-even time, and total lifetime savings.

HELOC Repayment Calculator — Draw Period vs. Repayment Period

Estimate how your HELOC payment changes when the interest-only draw period ends and the fully amortizing repayment period begins. See the total interest and payment increase.

Mortgage Repayment Method Comparison (Equal Installment vs Equal Principal)

Enter the loan amount, interest rate, and term to compare the monthly payment, total repayment, and total interest of equal installment repayment versus equal principal repayment, side by side.

Auto Loan Calculator

Enter the vehicle price, down payment, trade-in value, interest rate, and loan term to calculate the monthly payment, total payment, and total interest for your car loan.

Car Lease Payment Calculator

Enter the vehicle price, down payment, residual value rate, interest rate, and lease term to calculate your monthly lease payment, total payment, and total interest.