Mortgage Points Calculator
What buying points costs, how much it lowers the monthly payment, and how many months it takes to earn the cost back.
Result…
How it's calculated
Cost of points = loan × points ÷ 100 Payment = L × i ÷ (1 − (1 + i)^−n), i = yearly rate ÷ 12 Break-even months = cost ÷ (payment without − payment with) Net saving after h months = saving × h + (balance without − balance with) − cost
Points (discount points) are an upfront fee paid to the lender for a lower interest rate. They pay off only if you keep the loan long enough for the monthly saving to cover the cost. The break-even counts payment savings alone; the net saving also counts the slightly lower balance you owe on the cheaper loan.
Your numbers, step by step
About the Mortgage Points calculator
This mortgage points calculator tells you whether paying for a lower rate is worth it. Points, sometimes called discount points, are an upfront fee to the lender: one point costs 1% of the loan. Enter the loan amount, the rate with and without points, the number of points and the term. It shows the cost of the points, both monthly payments, the monthly saving and the break-even, the number of months before the saving covers the cost. Add the years you expect to keep the loan and it also shows the net saving by then, counting the slightly lower balance you would owe. The steps show each figure with your own numbers, so you can check a lender's quote.
How to use it
- Enter the “Loan amount” and the “Loan term”.
- Enter the “Rate without points” and the “Rate with points” from the lender's quote.
- Enter the “Points bought”; one point costs 1% of the loan.
- Enter the “Years you keep the loan” before you expect to sell or refinance.
- Read the break-even months and the net saving after the years you keep it.
Worked example
On a 300,000 loan over 30 years, 2 points cost 6,000 and cut the rate from 6.75% to 6.25%. The payment falls from 1,945.79 to 1,847.15, a saving of 98.64 a month, so the points break even after 61 months. Kept for 10 years, the net saving is 9,026.98; kept for the full term, the points save 35,511.37 in interest.
Updated
Questions people ask
How do I calculate the break-even on mortgage points?
Divide the cost of the points by the monthly payment saving. For 6,000 of points that save 98.64 a month, that is 61 months, rounded up.
How much does one mortgage point cost?
One point costs 1% of the loan amount, so one point on a 300,000 loan costs 3,000. How much the rate falls for each point is set by the lender.
When are points not worth buying?
When you expect to sell, refinance or repay the loan before the break-even. Until then the upfront cost is larger than what you have saved.
Why is the net saving different from the payment saving?
A lower rate also means you repay principal slightly faster, so you owe a little less if you sell or refinance. The net saving adds that difference and subtracts the cost of the points.
What does the points calculator not include?
It leaves out tax treatment, other closing costs and what the money could earn if you kept it. Points are not used in every country, and pricing differs by lender, so check the quote with the lender or a mortgage adviser. Compare the full cost of offers with the APR calculator.