Recasting: lowering the payment without refinancing at all

A borrower who comes into money — a bonus, the sale of another property, an inheritance — and wants a lower monthly payment usually thinks about refinancing. There is often a cheaper option that keeps the existing rate. A recast, sometimes called re-amortisation, means paying a lump sum toward principal and asking the servicer to recalculate the monthly payment over the remaining term. The interest rate does not change. The maturity date does not change. The payment drops because the balance did. Why it is attractive: no new loan, no appraisal, no title work, no closing costs beyond a modest servicer fee, and critically, no giving up the existing rate. For a borrower whose current rate is better than today's market, that last point is the whole argument. The limitations are real. Not every loan is eligible — government-backed loans generally are not, and some portfolio and jumbo loans exclude it. Servicers set a minimum lump sum and may limit how often. And it has to be requested: a large principal payment on its own reduces the balance and the interest but leaves the monthly payment exactly where it was. Compare it against the alternative uses of the same money, because the return on a recast is the mortgage rate, and that may or may not be the best available. The step is a phone call to the servicer: ask whether the loan is eligible, what the minimum is and what the fee is. Many borrowers are told no; many are never told the question existed. This article is general information, not legal, tax or financial advice. Rules change and every deal is different — check your own case with a licensed professional. Alberto Zaltzberg — Adonait · adonait.com