Early Mortgage Payoff Calculator
See how extra payments cut years off your loan and what they save in interest.
| Month | Payment | Principal | Interest | Balance |
|---|
Formulas:
- Scheduled payment:
PMT = P × r / (1 − (1 + r)−n)wherer = annualRate / 12,n = years × 12. - Payoff term with a constant extra payment:
nacc = −ln(1 − P × r / (PMT + extra)) / ln(1 + r).
How early payoff works
Why extra payments save so much
A mortgage payment is mostly interest early on: on a $300,000 loan at 6%, the first $1,798.65 payment contains $1,500 of interest and only $298.65 of principal. Every extra dollar skips that queue — it goes 100% to principal, and the interest it kills never compounds for the rest of the term. That is why $300/month extra on the default example erases 9 years and $119,700 of interest.
How the one-time payment is applied
The one-time extra payment in this calculator is applied with your first monthly payment, straight to principal. Timing matters: the earlier the balance drops, the more months of interest it saves. Example 2 below shows the same $10,000 applied at month 1 versus month 24.
Term shortening vs. recasting
Extra principal payments keep your contractual monthly payment unchanged and shorten the term — that is what this calculator models. The alternative is a recast (re-amortization): your servicer recalculates a lower payment over the original remaining term. Recasting improves monthly cash flow; shortening saves more total interest. This page shows the shortening scenario.
The exact simulation behind the numbers
For each month the calculator charges interest on the outstanding balance (r = annual rate ÷ 12), applies the scheduled payment plus your extra amount (and the one-time amount in month 1), and reduces the balance by whatever is left after interest. The payoff month is when the balance first reaches zero; interest saved is baseline total interest minus accelerated total interest.
Worked examples
Example 1: $300,000 at 6% for 30 years, +$300/month
Enter principal = 300000, annualRate = 6, years = 30, extra = 300, lumpSum = 0. Result: paid off in 252 months (21 years, 0 months) — 9 years earlier — with total interest of $227,813.81 instead of $347,514.57. Interest saved: $119,700.76.
Example 2: Same loan plus a $10,000 lump sum
Keep the inputs above and enter lumpSum = 10000. Applied with the first payment, the payoff falls to 236 months (19 years, 8 months) and total interest saved rises to $143,292.53. If the same $10,000 arrives later — say a bonus at month 24 — the numbers become 238 months and $139,779.38: earlier money always saves more.
Example 3: $200,000 at 6.5% for 30 years, +$100/month
Enter principal = 200000, annualRate = 6.5, years = 30, extra = 100. The scheduled payment is $1,264.14. With just $100 extra, the loan is paid off in 293 months (24 years, 5 months) — 5 years 7 months earlier — saving $55,945.77 in interest.
Related tools
The Early Payoff Calculator answers "what do extra payments buy me?". Related questions:
- "What is my normal payment and full schedule?" — the Loan / Mortgage Calculator computes the baseline amortization without extras.
- "What if I invest the extra money instead?" — extra payments earn your mortgage rate risk-free; to see the alternative, run the same monthly amount through the Compound Interest Calculator.
- "I'm saving for the down payment itself" — use the Savings Goal Calculator to work out the monthly deposit needed.
Frequently asked questions
Is it better to pay extra monthly or as one lump sum?
Earlier is better. Interest accrues on the outstanding balance every month, so a dollar of principal removed today saves more interest than the same dollar later. On the default example, the $10,000 lump sum saves $143,292.53 total when applied with the first payment, but only $139,779.38 if it arrives at month 24.
Do extra payments lower my monthly payment?
No — they shorten the term while the required monthly payment stays the same. If you want the payment to drop instead, ask your servicer about a recast (re-amortization) of the smaller balance over the original term.
Are there prepayment penalties?
Most US fixed-rate mortgages today have none, but prepayment penalties do exist in some contracts and other loan types. Check your loan documents or ask your servicer before committing to large extra payments.
Should I pay off my mortgage or invest instead?
Extra payments earn your mortgage rate with zero risk; investing offers a higher expected return with real risk. A common framework: kill higher-interest debt first, capture any employer match, then split extras between the mortgage and diversified investments according to your rate and risk tolerance.
Does this include taxes, insurance, or PMI?
No. Like the standard Loan Calculator, this models principal and interest only. Escrowed taxes, insurance, and PMI are separate from the payoff math — extra principal payments do not change them.