Mortgage Payoff Calculator
Every extra dollar you send to your mortgage goes straight to principal, which reduces the balance interest is charged on for every month that follows. That compounding effect is why modest extra payments can remove years from a loan. This calculator takes your balance, rate and time remaining, works out the scheduled payment, then re-runs the loan month by month with your extra payments and any lump sum to show the new payoff time, the date you would be mortgage-free and the interest you avoid.
How to use the mortgage payoff calculator
- Enter your current balance, rate and the years left on the loan (from your latest statement).
- Enter how much extra you could pay each month, and any one-time lump sum you want to apply today.
- Compare the “Time saved” and “Interest saved” rows with the scheduled loan, and check the chart of total interest.
- Before sending extra, confirm with your servicer that the extra goes to principal, and that there is no prepayment penalty.
Formula
The scheduled payment is L × i ÷ (1 − (1 + i)−n) with monthly rate i = annual rate ÷ 12. The payoff is then simulated month by month: interest = balance × i, and everything else you pay (scheduled payment plus extra) reduces the balance. The loop runs until the balance reaches zero; interest saved is total interest on the scheduled loan minus total interest with extra payments.
Worked examples
$200 extra on a 27-year balance
$250,000 at 6.5% with 27 years left has a scheduled payment of $1,638.89. Adding $200 a month pays the loan off in 20 years 7 months, which is 6 years 5 months sooner and saves $77,121.46 in interest.
A single lump sum
Putting a $20,000 bonus on the same loan once, with no extra monthly payment, saves $77,821.21 and takes 4 years 11 months off the term — early money does the most work.
No extra means no saving
With $0 extra and no lump sum, the interest saved is $0.00 and the loan runs its full scheduled term — a quick check that the model reproduces the original schedule.
Why extra payments work so well
Interest is charged on the balance, not on time
Each month, interest is the balance multiplied by the monthly rate. Any dollar you remove from the balance stops generating interest for the rest of the loan — so extra payments don’t just reduce what you owe by that dollar; they also remove the future interest on it. That compounding is why the interest-saved figure is usually much larger than the extra you pay in the early years.
Early extra principal beats late extra principal
Because a bigger share of each scheduled payment goes to interest early in the loan, extra principal paid in the first years shortens the term more than the same amount paid near the end.
Ways to pay extra
| Method | How it works |
|---|---|
| Round up the payment | Pay $1,500 instead of $1,387 — a painless habit |
| One extra payment a year | Add one-twelfth of a payment to each month |
| Biweekly payments | 26 half-payments = 13 monthly payments a year |
| Windfalls | Apply a bonus or refund as a lump sum |
Confirm with your servicer that extra payments are applied to principal. Learn the method in how to pay off your mortgage early.
Practice problems
Try these yourself first, then check your answer. The answers come from the calculator above.
- A $180,000 balance at 5.5% with 22 years left. How much interest does an extra $150 a month save?
Show answer
Payoff time with extra payments: 17 years 9 months · Time saved: 4 years 3 months · Interest saved: $28,610.88
Common mistakes to avoid
- Paying extra without telling the servicer it is for principal. Some servicers apply it to next month’s payment instead, which saves nothing.
- Ignoring prepayment penalties on a few older or specialist loans — check the loan documents.
- Sending extra when you have high-interest debt or no emergency fund. A 6.5% mortgage is usually a lower-priority target than a 22% card balance.
- Forgetting that “years left” changes. Re-run the calculator with your latest balance each year.
- Treating the payoff date as exact — it is approximate and measured from today.
Frequently asked questions
How much does an extra $100 a month save on a mortgage?
It depends on the balance, rate and years left. On a larger balance at a higher rate the saving is bigger. Enter your own numbers above; the interest-saved line gives the answer for your loan.
Is it better to pay a lump sum or extra every month?
The earlier any extra principal lands, the more interest it avoids, so a lump sum applied now beats the same total spread over years. Monthly extras are easier to afford and still very effective.
Does paying biweekly pay off a mortgage faster?
Paying half the monthly amount every two weeks makes 26 half-payments, equal to 13 monthly payments a year — one extra payment annually. Model it here by entering one-twelfth of your monthly payment as the extra.
Will extra payments lower my monthly bill?
No. Extra principal shortens the loan; it does not reduce the required monthly payment unless the loan is recast or refinanced.
Does this work for car loans or personal loans?
The method is the same for any fixed-rate amortising loan. For those, our loan calculator has a built-in extra-payment option.
Is this financial advice?
No. It is an educational estimate; confirm figures with your servicer.
Sources and further reading
- IRS — Topic no. 505, Interest expense (includes home mortgage interest)
- Federal Reserve Board — interest-rate and monetary-policy information
By Thomas M, Registered Investment Adviser (South Carolina), who launched his own financial advisory firm in 2010. Last reviewed September 26, 2026. Found a mistake? Tell us; see our editorial policy.