Mortgage recast
Re-amortization · Loan recastA mortgage recast is a lender's re-amortization of a loan after a large lump-sum principal payment: the lower balance is spread over the remaining term at the same rate, so the monthly payment drops while the rate and the payoff date stay where they were.
What is a mortgage recast?
The loan itself does not change. The note, the rate and the maturity date carry on; the only new term is a smaller payment, worked from the reduced balance over the months left.
A recast is not a refinance. A refinance replaces the loan with a new one at a new rate, with closing costs. A recast keeps the old loan and the old rate.
It is also not the same as paying extra principal and leaving the payment alone. The same lump sum without a recast keeps the payment where it was and clears the loan early. With a recast, the payment falls and the loan runs to its original date.
How a mortgage recast works, with numbers
A loan has $280,000 left, 300 payments to go at 6%, and a monthly principal-and-interest payment of $1,804. The borrower pays $50,000 toward principal and the servicer recasts.
The new payment on $230,000 over the same 300 months is $1,482, about $322 a month less, and the payoff date is unchanged. Had the $50,000 gone in as plain extra principal with the payment kept at $1,804, the loan would clear in about 204 months, roughly eight years sooner.
- Balance
- $280,000
- Lump-sum principal payment
- − $50,000
- New balance
- $230,000
- Remaining term, at 6%
- 300 months
- Payment before
- $1,804
- Payment after recast
- $1,482
Why a mortgage recast matters
A recast lowers the required payment without giving up the loan's rate, which is what separates it from a refinance when the existing rate is lower than the market's. The total interest falls because of the lump sum, not because of the recast; the recast decides whether that saving arrives as a smaller payment or as an earlier payoff.
Mortgage recast in Taiga Finance
The mortgage payoff planner in Taiga Finance has a “Recast” block with two fields, “Amount” and “On”, the date the lump sum lands. Adding it moves the headline readouts, “Paid off” and “Interest left to pay”, redraws “Balance over time” and “Monthly P&I payments”. The “Month by month” ledger lists the schedule.
The planner re-amortizes over the months left to the loan's original maturity date, so a loan already ahead of schedule recasts to the date on the note, not to the earlier date the extra payments had reached. A lump sum on its own is a separate block, “One-time payment”, so the two cases in the example above can be compared against a saved plan.
The public mortgage payoff calculator →Key takeaways: Mortgage recast
- A recast re-amortizes the balance after a lump-sum principal payment: the payment drops, the rate and the payoff date stay.
- No new loan is made; the note and its rate carry on.
- The same lump sum without a recast keeps the payment and pays the loan off early instead.
- A refinance replaces the loan at a new rate; a recast keeps it.
Questions about Mortgage recast
What is a mortgage recast?
A re-amortization by the servicer after a lump-sum principal payment. The smaller balance is spread over the remaining term at the existing rate, so the monthly payment falls while the rate and the payoff date stay the same.
What is the difference between a recast and a refinance?
A recast keeps the loan, the rate and the maturity date and lowers the payment after a lump sum. A refinance pays the loan off with a new one at a new rate and term.
How does a lump sum plus a recast lower my payment?
The lump sum cuts the balance, and the recast recomputes the level payment on that smaller balance over the months left. $50,000 off a $280,000 balance with 300 months at 6% takes the payment from $1,804 to $1,482.
Can Taiga Finance model a recast on my mortgage?
Yes. The mortgage payoff planner's Recast block takes an amount and a date, and shows the new monthly P&I, the payoff date and the remaining interest, with the schedule behind them. It re-amortizes to the loan's original maturity date.