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

This tool provides rough estimates for comparison only. Actual underwriting criteria, maximum loan-to-value limits, APR, taxes, insurance, and closing cost breakdowns vary by lender. Confirm the details with a formal quote before signing.

What a cash-out refinance is

A cash-out refinance replaces your existing mortgage with a larger one and **hands you the difference in cash**. Since a mortgage rate is ordinarily lower than that of unsecured borrowing, it serves to fund a renovation, consolidate debts or meet education costs. But the whole house is pledged afresh and the term is stretched out again, so a lower rate does not by itself mean less paid in total.

This tool sets a cash-out refinance beside the alternative of **keeping the present mortgage and borrowing the same sum separately**, and compares the combined monthly payment and the total paid to the end. It assumes a fixed rate and level instalments, and the closing costs are not rolled into the new balance but added to the total as an upfront cost. A separate loan is usually taken over a shorter term than a mortgage.

How to use the cash-out refinance calculator

Enter your present mortgage Give the balance, the annual rate and the remaining term. This is the starting point of the comparison.
Settle how much cash you want Enter the sum you mean to put towards a renovation, a consolidation or the like. It is added on top of the new loan’s balance.
Enter the terms after refinancing Give the new rate, the new term and the closing costs. The costs are not added to the balance; they enter the total as an upfront cost.
Enter the terms of the separate loan Give the rate and term for borrowing only the cash sum through a personal loan, a line of credit or the like. A higher rate over a shorter term is closer to reality.
Look at both the monthly and the total figure Do not decide on the monthly difference alone. Stretch the term and the monthly figure falls while the total paid rises. Weigh the two together.

Tips for getting more out of it

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.

Where a cash-out refinance is worth weighing

Funding a renovation

See whether the work can be financed at a mortgage rate. Put the builder’s quotation in as the cash sum and run the figures.

Consolidating high-rate borrowing

Compare folding card and personal debts into the mortgage against carrying on as you are. The wider the gap in rates the better it looks — but the lengthening of the term pulls the other way.

Measuring the effect of a longer term

For the same sum borrowed, a longer term lowers the monthly figure. This shows in numbers how much more interest that costs.

Judging whether the costs are worth it

Refinancing brings registration and arrangement fees at the outset. Whether the saving exceeds those costs is the test of whether it is worth doing.

When you want to weigh other ways of using the equity

For borrowing as a credit line, see the HELOC simulator; for the comparison with a lump-sum advance, HELOC versus home equity loan; for an ordinary repayment plan, the loan repayment calculator.

Terms used with a cash-out refinance

Cash-out refinance: A refinance in which the new loan exceeds the existing balance and the difference is taken in cash. The security remains the same house, and the total borrowed rises.
Closing costs: The costs arising at the outset of a refinance — arrangement fees, registration, guarantee charges and the like. This tool does not roll them into the balance but adds them separately to the total.
Level instalments: A method in which the monthly payment stays constant while its composition shifts gradually from interest to principal. These estimates assume it.
Total paid: The principal and interest paid to the end, together with the upfront costs. It can rise even as the monthly figure falls, when the term is stretched.
Lending limit: The ceiling on how much may be advanced against the appraised value of the security. The cash you can take out is bound by it, so you may not be able to borrow all you wish.
Unsecured loan: Borrowing without pledging security, as with a card or personal loan. Approval is quicker, but the rate is ordinarily higher than a mortgage.

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.

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