Mortgage Payoff Calculator
See how making extra payments can help you become mortgage-free sooner.
Extra Payments
Interest Saved
$0
Years Shaved Off
0
New Payoff Date
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About the Mortgage Payoff Calculator
This tool helps you see the powerful impact of making extra payments on your mortgage. By adding a little extra to your monthly payment or making occasional lump-sum payments, you can shave years off your loan term and save a significant amount in interest. This calculator visualizes your path to becoming debt-free sooner.
Formula Explained
The calculator works by running two amortization simulations:
- Original Schedule: It first calculates your standard monthly payment and total interest paid over the original loan term using the standard amortization formula.
- Accelerated Schedule: It then runs a second simulation, adding your extra monthly and/or one-time payments. Each extra payment is applied directly to the principal balance. This reduces the loan balance faster, meaning less interest accrues each month, and the loan is paid off sooner.
The "Interest Saved" is the difference in total interest between these two scenarios.
How to Pay Off Your Mortgage Faster
Looking for ways to accelerate your payoff date? Here are some popular strategies:
Make Bi-Weekly Payments
Instead of 12 monthly payments, make 26 half-payments. This results in one extra full payment per year, applied directly to your principal.
Round Up Your Payments
If your payment is $1,850, consider rounding up to $2,000 each month. That extra $150 goes a long way over the life of the loan.
Use Windfalls Wisely
Apply unexpected income like tax refunds, bonuses, or inheritances as a lump-sum payment to your principal.
Refinance to a Shorter Term
If interest rates have dropped, consider refinancing from a 30-year to a 15-year loan. Your monthly payment will be higher, but you'll save massively on interest.
Frequently Asked Questions
Is it a good idea to pay off your mortgage early? →
Paying off your mortgage early can save you thousands of dollars in interest and free up your monthly cash flow. However, it's a personal financial decision. Some people may prefer to invest extra money in the stock market, which could potentially offer a higher return than the interest rate on their mortgage.
How much extra should I pay on my mortgage? →
Even a small extra amount can make a big difference. A common strategy is to round up your monthly payment to the nearest hundred dollars. Another popular method is to make one extra mortgage payment per year, which can be done by dividing your monthly payment by 12 and adding that amount to each payment.
Should I inform my lender about extra payments? →
Yes, it's crucial. When you make an extra payment, you must specify that the additional amount should be applied "directly to principal." If you don't, the lender might hold the funds and apply them to your next month's payment, which won't save you any interest. Most online payment portals have a specific field for extra principal payments.