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Finance

Mortgage Payoff Calculator

See how extra payments can pay off your mortgage faster and save thousands in interest.

What is Mortgage Payoff Calculator?

A mortgage payoff calculator shows how making extra payments — monthly, yearly, or a one-time lump sum — can dramatically shorten your loan term and reduce total interest paid. Even small additional amounts applied to principal each month can save tens of thousands of dollars over the life of a loan.

How to use

  1. 1 Enter your original loan amount and annual interest rate.
  2. 2 Input your remaining loan term in years.
  3. 3 Add any extra payment amount you plan to make each month.
  4. 4 Optionally add a one-time lump sum extra payment.
  5. 5 The calculator shows your new payoff date, time saved, and total interest saved.

Formula

Standard amortization: M = P × [r(1+r)^n] / [(1+r)^n - 1]. With extra payments, the principal is reduced faster each period, recalculating the remaining n until balance = 0.

Example calculation

A $300,000 mortgage at 6.5% with 25 years remaining has a monthly payment of $2,023. Adding $300/month extra saves $89,000 in interest and pays off the loan 7 years early.

Frequently asked questions

Does it matter when I make extra payments?

Earlier extra payments save more interest because they reduce the principal balance on which future interest is calculated. The sooner you pay extra, the more you save.

Should I pay extra or invest the difference?

If your expected investment return exceeds your mortgage rate, investing may yield more mathematically. But paying off debt is a guaranteed risk-free return equal to your interest rate.

Can I make a one-time lump sum payment?

Yes. A lump sum applied directly to principal has the same effect as many months of extra payments at once, immediately reducing the interest accruing each month.

Will my monthly payment decrease with extra payments?

Usually no — standard loans keep the payment fixed but shorten the term. Some lenders allow recasting, which recalculates a lower payment after a large principal reduction.

How do I ensure extra payments go to principal?

Tell your lender explicitly that the additional amount should be applied to principal, not to next month's payment. Check your statement to confirm it was applied correctly.