Mortgage Payoff Calculator

How It Works

A mortgage is front-loaded with interest: in the early years, most of each payment is interest and only a small part reduces the balance. Extra payments break that pattern because they go entirely to principal. Every extra dollar shrinks the balance that next month's interest is charged on, which means more of the following payment goes to principal too — and the effect compounds month after month. That is why even a modest extra payment can cut years off a loan and save tens of thousands of dollars.

This calculator simulates your loan month by month, twice. First it runs the baseline: your scheduled payment, worked out from the balance, rate and remaining term, with no extras. Then it runs the same loan with your extra monthly payment added every month, your extra annual payment added once a year, and your lump sum applied at the start. The difference between the two runs is the time saved and the interest saved — the two numbers that tell you whether the extra payments are worth it.

Worked Example

Take a $280,000 mortgage balance at 6.5% with 25 years remaining. The scheduled payment is $1,890.58 a month, and paying only that amount means 300 payments and $287,174.02 of total interest. Now add $200 extra a month and $1,000 extra once a year. The loan is paid off in 223 months (18 years and 7 months) instead of 300, with $202,434.27 of interest. That saves $84,739.74 of interest and 77 months — more than six years of payments gone. Starting from November 2026, the payoff date moves from November 2051 to June 2045.

The annual payment punches above its weight because it lands as a lump: $1,000 once a year is about $83 a month, but applied all at once it cuts the balance in a single step. The monthly $200 does the steady work, and the two together are worth far more than either alone — the monthly $200 on its own saves $66,893.94, while adding the $1,000 a year takes the saving to $84,739.74.

Assumptions

• The interest rate stays fixed for the remaining term.
• All extra payments go entirely to principal, with no prepayment penalty. Most modern mortgages have no prepayment penalty, but check your loan documents — and confirm with your servicer that extra payments are applied to principal rather than treated as early payment of future instalments.
• The baseline scheduled payment is calculated from the balance, rate and remaining term you enter, using the standard amortization formula. If your actual payment differs (for example, because of an escrow change), use the balance and term from your latest statement.
• The extra annual payment is applied every 12th month, and the lump sum is applied in the first month.
• Taxes, insurance and HOA dues are not included — this calculator covers principal and interest only.

What this calculator leaves out: the tax deduction on mortgage interest, which slightly reduces the value of paying interest down; the return you could earn by investing the extra money instead; and any future refinancing. It answers one question — what extra payments do to this loan — and answers it precisely.

How much extra is enough? The table below shows the same $280,000 loan at 6.5% with 25 years remaining, at five levels of extra monthly payment (no annual extra, no lump sum):

The first $100 a month saves $38,337.50 — the biggest return comes from the earliest dollars, because early principal reductions compound the longest. Each additional $100 saves a little less than the one before it, but even at $500 a month the saving is enormous: $121,848.24 of interest and more than nine years of payments.

How to Use This Calculator

Enter your current balance, rate and remaining term from your latest mortgage statement — the remaining term is what matters, not the original term. Then add the extra payments you are considering: a monthly amount, an annual amount, a lump sum, or all three. The headline result is your new payoff date, with the baseline beside it, plus the interest saved and the time saved. Download the CSV to see the full month-by-month schedule with extras applied.

Try the lump sum on its own to see what a single windfall is worth. On the worked example, a one-time $10,000 payment with no monthly extra pays the loan off in 275 months and saves $37,346.46 of interest. That is the value of sending a bonus or tax refund to the mortgage instead of spending it — and it is a useful comparison if you are deciding between a lump sum and a higher monthly payment.

Tips and Practical Advice

Make sure the extra money actually hits the principal. Some servicers, left to themselves, treat an extra payment as an early payment of next month's bill, which does not reduce the balance any faster. Either pay through the servicer's designated principal-only channel, or write to them and confirm in writing that extra payments are applied to principal. Check your next statement to be sure it happened.

Start with an amount you can sustain every month rather than a heroic amount you abandon in three months. The maths rewards consistency: $200 every month for years beats $500 for six months and then nothing. If your budget is tight, begin with $50 or $100 and raise it when you get a pay rise — the calculator shows you that even $100 a month is worth $38,337.50 on this loan.

But do not pay down the mortgage at the expense of everything else. Before sending extra money to a 6.5% mortgage, clear any credit card debt at 20% or more, keep an emergency fund of three to six months of expenses, and capture your full employer 401(k) match. Extra mortgage payments are a good use of money only after the higher-return and higher-safety uses are covered.

Sources: figures are calculated from the balance, rate and term you enter using standard amortization; no external rate data is used. Confirm prepayment terms with your loan servicer. Last reviewed: 13 November 2026.

Frequently Asked Questions