Calculators

Mortgage Payoff Calculator

This calculator shows what regular extra monthly payments, a one-off lump sum, or both would save on your mortgage. It assumes your interest rate stays the same for the remaining term and that extra payments go straight to principal, shortening the loan rather than lowering the monthly payment. Check your loan documents for any prepayment penalty before paying extra.

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Overview

The mortgage payoff calculator shows what paying a little extra would really do to your mortgage. Enter your current balance, interest rate and remaining term, then add a regular extra monthly payment, a one-off lump sum, or both. The calculator works out your current monthly payment, re-runs the amortization schedule with the extra money going straight at the principal, and reports the interest saved and how much sooner the mortgage is paid off.

Extra payments are powerful because every dollar of principal paid early stops interest being charged on it for the rest of the loan. On a typical fixed-rate mortgage, even a modest extra monthly payment made consistently removes years from the loan — and because the balance falls faster, each later payment clears more principal than it otherwise would. The calculator assumes your rate stays the same for the remaining term and that extra payments shorten the loan rather than lowering the monthly payment.

How it works

Enter your mortgage

The outstanding balance, your current annual interest rate and the term you have left in years and months — all three are on your latest mortgage statement.

Add your extra payment

A regular extra monthly payment, a one-off lump sum paid now, or both. The lump sum comes off the balance immediately; the monthly amount is paid on top of every regular payment.

Compare the schedules

We simulate the mortgage month by month with and without the extra payments, and report the interest saved, the new payoff term and how much earlier you're mortgage-free.

Worked example

$300,000 at 6.5% over 30 years, paying $200 extra a month

A $300,000 mortgage at 6.5% with 30 years to run costs about $1,896.20 a month, and roughly $382,600 in interest over the full term. Paying $200 extra a month — about 10% extra — pays the mortgage off in around 23 years instead.

That single change saves about $103,450 in interest and makes you mortgage-free around 7 years earlier. The earlier in the loan you start paying extra, the bigger the saving, because the balance — and therefore the interest — is at its largest in the early years.

Frequently asked questions

Will I be charged a penalty for paying extra on my mortgage?

Usually not. For most mortgages, federal rules (Regulation Z) only allow a prepayment penalty on certain fixed-rate qualified mortgages, and even then it can't apply after the first three years of the loan or exceed 2% of the outstanding balance in the first two years (1% in the third year). Lenders offering a loan with a penalty must also offer you one without. Most conventional, FHA and VA loans today have no prepayment penalty at all — but check your closing documents or ask your servicer to be sure.

Does paying extra help remove PMI sooner?

Yes. Under the Homeowners Protection Act you can request PMI cancellation once your balance falls to 80% of your home's original value — and extra payments get you there sooner than the schedule would. You'll need to ask in writing, be current with a good payment history, and possibly show the value hasn't declined. Separately, PMI terminates automatically when the balance is scheduled to reach 78% of the original value, and at the latest at the midpoint of the loan term.

Is it better to pay extra monthly or with a lump sum?

Dollar for dollar they work the same way — money off the principal stops interest accruing on it. A lump sum paid today starts saving interest immediately on the whole amount, while monthly extra payments build up gradually. If you already have the cash, the lump sum saves slightly more; if you're paying out of income, regular monthly extras are the practical route. The calculator lets you model both at once.

Do extra payments lower my monthly payment or shorten the loan?

By default they shorten the loan: your required payment stays the same and the balance just runs out sooner, which is what this calculator models and what maximises the interest saving. If you'd rather lower the monthly payment instead, some lenders offer a recast — after a lump sum they re-amortize the remaining balance over the existing term for a small fee, cutting the payment but saving less interest overall.

How do I make sure extra payments actually reduce the principal?

Tell your servicer explicitly that extra money is a principal-only payment. Otherwise it may be applied to next month's payment or held in escrow, which doesn't save you any interest. Most servicers have a principal-only option in their online payment flow; for mailed checks, follow the instructions on your statement. Check your next statement to confirm the balance dropped by the extra amount.