Mortgage Payoff Calculator
See how extra monthly payments can reduce your loan term and save thousands in interest over the life of your mortgage.
About this Calculator
See how extra monthly payments can reduce your loan term and save thousands in interest over the life of your mortgage.
Formula & Calculations
Formula
Months to payoff = iteration over monthly amortization: balance(t+1) = balance(t) × (1 + r/12) - paymentWhere:
- B=Current loan balance
- r=Annual interest rate
- P=Regular monthly payment
- E=Extra monthly payment added to principal
- T_normal=Time to payoff with regular payments only
- T_extra=Time to payoff with extra principal payments
Assumptions
- Assumes a fixed interest rate for the remaining loan term.
- Extra payments are applied directly to principal reduction.
- Does not account for prepayment penalties (check your loan terms).
- Calculation uses monthly amortization iteration.
Calculation Examples
Example 1
Adding just $200/month to your mortgage payment saves nearly 8 years and over $67,000 in interest.
Example 2
An extra $300/month shaves nearly 4 years off the payoff timeline and saves over $16,000.
Example 3
On a larger loan at a higher rate, extra payments have an even more dramatic impact on interest savings.
Frequently Asked Questions
How much can one extra payment per year save?
Making one extra mortgage payment per year (bi-weekly payments or a 13th payment) can reduce a 30-year loan by 4-5 years. For a $300,000 loan at 6.5%, this saves approximately $60,000-$75,000 in interest.
Should I pay off my mortgage early or invest?
Compare your mortgage interest rate to potential investment returns. If your mortgage rate is 3% but you can earn 7% in the market, investing may be better. However, being debt-free provides peace of mind that some value above pure math.