Mortgage Payoff Calculator
This Calculator helps you estimate how extra payments, biweekly payments, or a one-time lump sum can reduce your overall interest and shorten the term of your mortgage loan.
How to Use the Calculator
Enter your current loan details, such as the original loan amount, loan term, interest rate, and remaining balance. Then, add any extra monthly, yearly, or one-time payments you wish to make.
You can use this calculator in two ways:
If You Know the Remaining Loan Term
Use this option if you know your remaining loan duration and original loan details. This is ideal for newer loans or those without prior extra payments.
After entering your repayment options like monthly, yearly, or one-time contributions, the calculator will show how your loan payoff period changes. For example, adding an extra $500 per month could reduce a 25-year term to 17 years and 3 months, saving you over $120,000 in interest payments.
If You Don't Know the Remaining Loan Term
If you don't know your remaining loan term, you can still calculate your payoff time by using your unpaid principal balance, interest rate, and current monthly payment. These details are typically found on your mortgage statement.
The calculator determines your estimated remaining term and how extra payments affect it. For instance, paying an additional $500 monthly could shorten your term from 24 years to 14 years, saving nearly $95,000 in interest.
Understanding Your Results
Your results show how extra payments affect your payoff time, interest savings, and monthly cash flow. The main sections include:
- Interest Savings: How much total interest you'll save by paying off your loan faster.
- Time Savings: How much earlier you'll pay off your mortgage.
- Amortization Table: A month-by-month breakdown of how each payment covers principal and interest.
- Comparison Chart: Side-by-side view of your original schedule vs. the updated payoff plan.
Use these insights to adjust your payment frequency. You can also compare different strategies for early mortgage payoff.
Principal and Interest Explained
Every mortgage payment consists of principal and interest.
The principal is the money you borrowed, and the interest is what you pay to the lender for using that money. In the early years of a mortgage, the majority of your payment moves toward interest. As you keep paying and the principal amount gets smaller, more of your payment starts going toward the actual loan balance.
This changing ratio is part of an amortization schedule. It is a plan that shows how each payment slowly reduces your debt. The Mortgage Payoff Calculator helps you see this process clearly. It also shows how extra payments speed up principal reduction and save you thousands in interest.
How to Pay Off a Mortgage Early
Many homeowners aim to become mortgage-free faster. Below are common strategies that the calculator can help you evaluate.
Extra Payments
Adding extra payments, whether monthly, yearly, or just once, helps reduce your principal faster. Even small, steady contributions can make a noticeable difference over time.
For example, a single $1,000 payment on a $200,000 loan at 5% interest can shorten your payoff period by several months. Regular extra payments of $50 or $100 a month can add up to thousands in interest savings over the life of the loan.
Biweekly Payments
Instead of making one payment each month, try paying half the amount every two weeks. There are 26 biweekly periods in a year, which equals 13 full monthly payments. This means you make one extra payment each year without much added pressure. Over time, this simple change can shorten a 30-year loan by about four to five years in many cases and save a large amount in interest.
Refinancing to a Shorter Term
Refinancing to a shorter mortgage term often comes with a lower interest rate. It also reduces the total interest you pay over time. The downside is higher monthly payments, but you build equity faster. Use the calculator to see how a shorter term changes your payments and payoff timeline. Before deciding, compare different mortgage rates or try a refinance calculator to find what works best for you.
Important Considerations
Prepayment Penalties
A few lenders might charge you a prepayment penalty if you pay off your loan earlier. This charged fee compensates them for the interest they lose. Prepayment penalties can vary. Some are based on a percentage of your remaining balance, while others depend on a set interest period. Always read your loan agreement carefully before making extra payments to make sure no penalty applies.
Opportunity Costs
Paying off your mortgage early can save a lot in interest. However, it might leave you with less money for other financial goals. Sometimes, investing in retirement accounts or the stock market can earn more than your mortgage interest rate.
Think about your full situation before deciding. If you are considering property-related investments, renovations, or purchasing another home, you can also use our Cost Per Square Foot Calculator to understand the real cost per square foot and make smarter decisions. But if you have high-interest debts, low savings, or no emergency fund, it may be better to focus on those first.
Examples
Example 1
A borrower with a $300,000, 30-year mortgage at 6% interest adds an extra $200 each month. This shortens the loan term by about five years and saves nearly $70,000 in interest.
Example 2
A homeowner with a $250,000 loan at 5% switches to biweekly payments. The loan is paid off almost four years earlier, saving about $35,000 in total interest.
Example 3
A borrower refinances from 6% to 4.5% on a $200,000 balance with 20 years left. They save more than $25,000 in interest while keeping a similar monthly payment.
Some Commonly Asked Questions
It helps you see how extra or biweekly payments change your loan payoff time, interest savings, and total amount paid.
Yes. One extra full payment each year can shorten a 30-year mortgage by about four to five years, depending on your loan and interest rate.
It depends on your goals and finances. Paying off early gives guaranteed savings on interest, while investing could bring higher returns over time.
Most modern loans, such as FHA, VA, or credit union loans, do not have prepayment penalties. Still, it is best to check your loan agreement to be sure.
Yes. Biweekly payments add up to one extra monthly payment each year, which helps reduce your loan term and total interest cost.