Lower rate, cheaper loan? Not when the term blows out. Compare asset finance against a mortgage cashout to see which costs more.
Separate loan. Shorter term, higher rate.
Fees
Exit Costs
Same debt rolled into the mortgage. Lower rate, longer term.
Extra Repayments
Refinance Costs
The mortgage cashout costs $21,885.39 more to borrow.
You save $419.45/month on repayments, but carry the debt for 20.0 extra years. $21,885.39 more in interest.
More interest on the mortgage cashout
Longer to pay off on the mortgage
Lower on the mortgage
| Metric | Asset Finance | Mortgage Cashout | Difference |
|---|---|---|---|
| Loan Amount | $30,000.00 | $30,000.00 | $0.00 |
| Upfront Fees (Financed) | $0.00 | $0.00 | $0.00 |
| Amount Financed | $30,000.00 | $30,000.00 | $0.00 |
| Interest Rate | 8.50% | 6.15% | 2.35% |
| Loan Term | 5 yrs | 25 yrs | 20 yrs |
| Repayment (Monthly Equivalent) | $615.50 | $196.05 | $419.45 |
| Total Interest Paid | $6,929.76 | $28,815.15 | $21,885.39 |
| Interest Charged on Fees | $0.00 | $0.00 | $0.00 |
| Total Fees | $0.00 | $0.00 | $0.00 |
| Cost of Borrowing (Interest + Fees) | $6,929.76 | $28,815.15 | $21,885.39 |
| Total Paid (Inc. Loan Amount) | $36,929.76 | $58,815.15 | $21,885.39 |
| Years to Pay Off | 5.0 yrs | 25.0 yrs | 20.0 yrs |
Interest and fees paid to date on each option. Each line ends when that loan is paid off; the gap between the end points is the extra cost.
It is what happens when a client rolls a car loan, personal loan, or other asset finance into a mortgage refinance to chase a lower interest rate, without realising the debt now runs for the remaining mortgage term — often 20-plus years — instead of the original 5-to-7-year loan term. A lower rate stretched over a much longer term can cost far more in total interest than keeping the debt separate.
Total interest is a function of rate and time, not rate alone. A car loan at 8.5% over 5 years accrues interest for 5 years. The same balance rolled into a mortgage at 6.15% over the remaining 25 years accrues interest for 25 years. The much longer term usually outweighs the lower rate.
Enter the client's actual asset finance (rate, term, fees) on one side, and what the same balance would look like added to their mortgage on the other (mortgage rate, remaining term). The calculator shows the extra interest, the extra cost of borrowing (interest plus fees), and how many extra years the mortgage side takes, plus a year-by-year interest chart.
Upfront fees on both sides (establishment and documentation fees on the asset finance, refinance costs on the cashout) are added to the loan balance, so interest is charged on them for the life of the loan. The breakdown shows the amount financed and how much interest the fees themselves attract. A fee financed over 25 years can cost close to double by the time it is repaid.
It is the discharge fee charged when the asset finance is closed at the end of its term, which is a cost of keeping the loan. If rolling the loan into the mortgage would trigger an early payout or break fee, add that to Refinance Fees on the mortgage side instead, because it is a cost of rolling it in.
Yes — if the client makes extra repayments on their mortgage, enter that amount on the cashout side and the calculator will shorten the effective payoff period for that portion of debt accordingly.
Not always — cash flow relief from lower minimum repayments can matter for some clients, and paying extra to clear the rolled-in amount quickly can offset the longer-term math. This tool is designed to make the trade-off visible so it can be discussed, not to say one option is universally correct.
No. This tool is for education and illustration only. A client should get personal financial or credit advice before restructuring debt.
This tool is for education and illustration only. It is not financial or credit advice.