1. What is the Break-Even Point Calculation?

The break-even point calculation determines how many months it will take to recover the costs associated with loan refinancing or transfer through monthly savings. This helps borrowers make informed decisions about whether refinancing is financially beneficial.

2. How Does the Calculator Work?

The calculator uses the break-even formula:

Where:

• \( C \) — Total costs associated with refinancing (₹)
• \( S \) — Monthly savings from refinancing (₹/month)

Explanation: This simple division calculates how many months of savings are needed to cover the upfront costs of refinancing.

3. Importance of Break-Even Analysis

Details: Break-even analysis is crucial for determining whether loan refinancing makes financial sense. If you plan to keep the loan longer than the break-even period, refinancing is generally beneficial.

4. Using the Calculator

Tips: Enter all costs associated with refinancing (processing fees, legal charges, etc.) and your estimated monthly savings from lower EMI payments. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What costs should be included in the calculation?
A: Include all upfront costs such as processing fees, legal charges, valuation fees, and any other expenses associated with the refinancing process.

Q2: How do I calculate monthly savings?
A: Subtract your new EMI amount from your current EMI amount. The difference represents your monthly savings.

Q3: What is a good break-even period?
A: Typically, a break-even period of 12-24 months is considered reasonable for home loan refinancing in India.

Q4: Should I consider prepayment charges?
A: Yes, if your current lender charges prepayment penalties, these should be included in your total cost calculation.

Q5: Does this calculation consider tax benefits?
A: No, this is a simple break-even calculation. For a comprehensive analysis, consult with a financial advisor who can consider tax implications and other factors.