Mortgage Payoff Calculator
Enter your loan balance, the interest rate, the months left on the loan and an extra amount to pay each month, once a year or as a one-time lump sum. The calculator shows the original and new payoff dates, the months you save, the interest you save and the total interest with and without the extra payment.
How to use the Mortgage Payoff Calculator
- Enter your numbers in the Mortgage Payoff Calculator above.
- Press the Calculate button to see the result.
- To try other numbers, change any value and press the button again.
The mortgage payoff mechanics
Regular payment: M = B · r(1 + r)^n / ((1 + r)^n − 1), or B ÷ n at 0% Each month: new balance = balance + balance · r − payment
B is the loan balance, r is the annual interest rate divided by 12 and n is the months left. The calculator works out your regular payment M from those three numbers and rounds it to the cent. If that would leave a last payment more than 1% above M, it adds a cent at a time until it does not, as the mortgage calculator does. Then it runs the loan month by month twice, once paying M and once paying M plus your extra amount. It rounds each month's interest to the cent. The payment that clears the balance pays that month's interest and whatever is left, and the run stops there. Each run adds up its interest column, and the interest saved is the first total minus the second.
Worked example
A $300,000 balance at 6.5% with 360 months left has a regular payment of $1,896.20. Add $200 a month and you pay the loan off in 277 months instead of 360, which saves 83 months. Total interest falls from $382,636.71 to $279,186.52, a saving of $103,450.19. The mortgage calculator shows the same $382,636.71 for a 30-year $300,000 loan at 6.5%. Add $1,000 in month 12 of each loan year and a $5,000 lump sum with payment 12, and the loan ends after 246 payments, 114 months early, with $240,429.33 of interest, a saving of $142,207.38.
Frequently asked questions
Can I model a lump sum or a yearly extra payment?
Yes. Type a yearly amount and the month of each loan year it goes in, or a lump sum and the payment number it goes in with. A $10,000 lump sum with payment 12 on the example loan, and nothing else, saves 31 months and $50,230.40 of interest. Each amount goes to principal, and the schedule ends when the balance reaches $0.00. For the month-by-month table, use the mortgage amortization calculator, which takes the same amounts.
Should I pay extra or invest instead?
Compare your mortgage rate with the after-tax return you expect from investing. An extra dollar on the mortgage cancels interest at your mortgage rate, and that saving is certain. An investment can beat that rate or fall short of it. On a 6.5% mortgage, the investment has to earn more than 6.5% after tax to come out ahead.
Are there prepayment penalties?
Some mortgages charge a fee for paying off early. Your loan documents say whether yours has one and for how long it applies. Check them, or ask your servicer, before you send a large extra payment.
How should I send extra payments?
Tell your servicer to apply the extra amount to principal. Otherwise some servicers hold it as an early payment toward next month's bill, and the balance does not fall.