Mortgage Payoff Calculator with Extra Payments

See How Extra Payments Change Your Payoff

Mortgage Payoff Formula

Formula

\[ \begin{aligned} r&=\frac{i}{1200} \\ P&=\frac{B_0r}{1-(1+r)^{-n}} \\ E_t&=M+L\mathbf{1}_{t=q}+Y\mathbf{1}_{12\mid t} \\ B_t&=\max\!\left(0,\,B_{t-1}(1+r)-P-E_t\right) \end{aligned} \]

Where:

$B_0$ — current loan balance.
$B_t$ — balance after payment month $t$.
$i$ — annual interest rate as a percentage; $r$ is the monthly rate.
$P$ — regular monthly principal-and-interest payment; $n$ is the remaining term in months.
$M$, $L$, and $Y$ — extra monthly, one-time, and yearly payments, respectively.
$q$ — month of the one-time payment; $\mathbf{1}$ equals 1 when its condition is true and 0 otherwise.

The calculator applies monthly interest, then subtracts the regular payment and any extras scheduled for that month. It repeats this calculation until the balance reaches zero and compares the result with a schedule that has no extra payments. If the rate is 0%, the term-based payment is $P=B_0/n$; if you enter a payment instead of a term, that payment is used as $P$.

Mortgage Payoff – Calculation Example

Example: You have a $300,000 balance at 6% annual interest, with 25 years remaining. You add $250 to every monthly payment and make no one-time or yearly extra payment. The calculated regular principal-and-interest payment is about $1,932.90.

In month 1, interest is $1,500. The payment including the extra $250 is about $2,182.90, so the balance becomes:

\[ B_1\approx 300{,}000+1{,}500-1{,}932.90-250=299{,}317.10 \]

Result: the balance after the first payment is about $299,317.10, versus $299,567.10 without the extra $250. The calculator continues both schedules to determine the payoff time and total interest saved.

How to use the calculator

Enter your Current loan balance and Annual interest rate. Use the balance you owe now, not the original loan amount.
Under Enter your remaining term or payment, choose Remaining term to enter Remaining years and Additional months. Alternatively, choose Monthly principal and interest payment and enter your regular payment in the Monthly principal and interest field. Do not include taxes or insurance.
Enter an Extra monthly payment if you plan to add the same amount every month.
For a lump sum, enter a One-time extra payment and its One-time payment in month. Month 1 is your next payment. Enter an Extra yearly payment for an amount added in months 12, 24, 36, and so on. Leave an extra-payment amount at zero if it does not apply.
Compare the new payoff month, Time saved, and interest totals. Use Balance over time and Amortization by year to see how the two balances diverge.

How extra payments change your mortgage payoff

Mortgage interest is calculated on the unpaid balance. When an extra payment reduces that balance, less interest accrues in later months. More of each subsequent regular payment can then reduce principal. That is why a series of extra payments can shorten the loan by more than their dollar amount alone might suggest.

The calculator runs two schedules from the same starting balance and regular payment: one without extras and one with the extras you entered. Interest saved is the difference between their total interest charges. Time saved is the difference between their payoff durations. The displayed payoff month is based on the current calendar month and the number of payments remaining; it is an estimate, not a lender-issued payoff date.

In the yearly breakdown, Paid with extras includes regular and extra payments made while the loan is outstanding. The balance comparison shows whether your chosen extras make a meaningful difference at the points in time that matter to you. If you are still choosing a loan amount and term, the mortgage calculator provides a starting payment estimate. If you are weighing a new rate instead, compare the potential savings with the refinance interest savings calculator.

Assumptions and practical tips

This calculation assumes a fixed annual rate divided into monthly periods and applies each payment after that month’s interest accrues. Extra monthly payments are added every month, one-time payments are added in the selected month, and yearly payments are added every 12th month. The final payment is limited to the amount owed; an extra payment scheduled after payoff has no effect.

Enter only principal and interest as your regular payment. Property taxes, homeowners insurance, mortgage insurance, and homeowners association fees do not reduce the loan balance and are not included in the interest comparison. The estimate also does not account for changing rates, payment-date differences, fees, or prepayment penalties.

Before paying extra, check that your lender will apply the amount to principal rather than hold it for a future installment, and confirm any restrictions on early repayment. If you entered a monthly payment, it must exceed the first month’s interest; otherwise, the balance cannot begin to fall under the regular-payment schedule. To compare a mortgage with other borrowing you might repay first, use the loan calculator for that debt’s payment and interest estimate.

Frequently Asked Questions

How can I estimate my mortgage payoff with extra payments by hand?

Start with your current balance. For each month, multiply it by the annual interest rate divided by 12, add that interest to the balance, then subtract your regular payment and any extra payment. Repeat until the balance reaches zero. For example, on a $200,000 balance at 5%, the first month’s interest is about $833.33. A $1,200 payment plus $100 extra leaves about $199,533.33.

How much extra should I pay toward my mortgage each month?

There is no universally good amount. Try several amounts and compare the interest saved with what you would give up each month. Even a modest, consistent extra payment can help, but first consider your emergency savings, higher-interest debt, and other financial goals. Choose an amount you can sustain without relying on money you may need for near-term expenses.

Is paying half my mortgage payment every two weeks the same as making an extra monthly payment?

Not exactly. Paying half the monthly amount every two weeks produces 26 half-payments a year—the equivalent of 13 full monthly payments rather than 12. To approximate that in this calculator, divide your regular monthly principal-and-interest payment by 12 and enter the result as an extra monthly payment. Actual savings may differ because your lender may credit biweekly payments on different dates or hold partial payments.

Does making a lump-sum payment now save more interest than making it later?

Usually, yes. At the same interest rate, reducing principal sooner generally prevents more future interest than making the same payment later. The difference depends on your balance, rate, and how long the loan remains outstanding. Keep enough accessible cash for emergencies before making a large payment, and ask your lender how and when it will be credited.

Will extra mortgage payments lower my required monthly payment?

Usually not. Extra principal payments typically shorten the payoff period while the required principal-and-interest payment stays the same. Some lenders offer a mortgage recast, which recalculates the required payment after a substantial principal reduction, often for a fee. Recasting can lower the payment, but it generally preserves the remaining term rather than producing the same early-payoff result as continuing to pay the original amount.

Should I enter my mortgage interest rate or its APR?

Enter the interest rate used to calculate interest on your loan balance, not the annual percentage rate (APR) from a loan disclosure. APR can include certain borrowing costs and may be higher than the interest rate; using it here could overstate the interest charged each month. If you are unsure which rate applies, check your mortgage statement or loan documents.

What happens if the interest rate is 0% or an extra payment exceeds the balance owed?

At 0% interest, extra payments can shorten the payoff time, but there is no interest to save. If a scheduled payment is larger than the remaining amount due, only the amount needed to clear the balance counts toward payoff. A later extra payment has no effect once the loan is paid off. Your lender’s actual final payoff amount may differ because of payment dates or other charges.