This tool shows how paying extra toward your mortgage can shorten your loan and cut the total interest you pay. A standard mortgage is front loaded with interest, so in the early years most of each payment covers the interest charge and only a small part reduces the balance. Because every extra dollar you send goes straight to principal, it removes future interest that would have accrued for the rest of the loan. The calculator compares your original schedule against one with extra payments.
The calculator uses the standard amortization formula for a fixed rate loan. The monthly payment is the principal times the monthly rate times the quantity one plus the monthly rate raised to the number of months, all divided by the same quantity one plus the monthly rate raised to the number of months, minus one. In plainer terms, the principal is the amount you owe, the monthly rate is your annual interest rate divided by twelve, and the number of months is the term in years times twelve. Each month the interest portion is the balance times the monthly rate, and whatever is left of your payment reduces the balance. Extra payments apply directly to principal, which shrinks the balance faster and shortens the term.
Suppose you owe $200,000 at a 6 percent annual rate with 25 years remaining. The monthly rate is 0.06 divided by 12, which is 0.005, and the term is 300 months. The formula gives a required payment near $1,289. In the first month the interest portion is $200,000 times 0.005, or $1,000, so only about $289 reduces the balance. Now add $200 extra each month. That $200 attacks principal, so the balance falls faster, next month's interest is smaller, and the loan finishes years earlier with meaningfully less total interest.
Enter your current loan balance, interest rate, remaining term in years, and current monthly payment. Then add any extra monthly payment, an annual lump sum, and how many extra payments you plan per year. Press Calculate Payoff. The tool reports the months saved and total interest saved, a comparison table of original versus accelerated totals and payoff dates, a first year amortization schedule, and a yearly balance projection.
This calculator produces educational estimates from a standard formula, so it assumes a fixed interest rate and a consistent payment pattern. It does not model adjustable rates, escrow, private mortgage insurance, prepayment penalties, or the tax treatment of mortgage interest, all of which can change the real picture. It also cannot judge whether prepaying beats investing, paying higher interest debt, or building an emergency fund. Confirm that your lender applies extra payments to principal, and use the results as a planning guide.
Why does paying extra save so much interest? Interest is charged on the remaining balance, so cutting the balance sooner removes all the future interest that balance would have generated over the rest of the loan.
Is a lump sum or a monthly extra better? Both help. A monthly extra chips away steadily, while a lump sum makes a larger immediate dent. The best choice depends on your cash flow.
Will my required payment go down if I prepay? Usually no. On most fixed loans your scheduled payment stays the same and prepaying shortens the term instead, unless you formally recast the loan with your lender.
Should I always pay my mortgage off early? Not necessarily. It depends on your rate, other debts, savings, and goals, which is why this is a math tool, not advice.
Disclaimer: This calculator provides educational estimates using standard formulas, not personalized financial advice. Lending terms, interest rates, and your individual circumstances vary. Consult a licensed mortgage, financial, or tax professional before making decisions.