Early Mortgage Payoff Calculator
Discover how many years you can cut from your mortgage and how much interest you'll save by making extra monthly payments. Enter your remaining balance, rate, and extra payment to see the exact impact.
About this calculator
Your current required monthly payment is first calculated using the standard amortization formula: P = balance × (r × (1+r)^n) / ((1+r)^n − 1), where r = mortgageRate/100/12 and n = remainingTerm × 12. Adding an extra payment on top of P produces a new total monthly payment. The calculator then simulates month-by-month amortization: each month, interest = balance × r is charged, then the full new payment is subtracted, reducing principal faster. The loop continues until the balance reaches zero. Months saved = original term in months minus the new payoff month count. Interest saved = (original payment × original term months) − (new payment × new month count) − any small final payment adjustment. This simulation approach handles the non-linearity of compound interest exactly, rather than approximating with a simple formula.
How to use
Say your remaining balance is $200,000 at 6% annual interest with 20 years left, and you add $200/month extra. Monthly rate r = 0.06/12 = 0.005; n = 240. Standard payment P = 200000 × (0.005 × 1.005^240) / (1.005^240 − 1). 1.005^240 ≈ 3.3102; P = 200000 × (0.01655) / (2.3102) ≈ $1,432.86. New payment = $1,632.86. The calculator simulates month by month until balance = 0, arriving at roughly 191 months instead of 240 — saving about 49 months (4 years and 1 month). Total interest saved ≈ $34,000, illustrating the powerful impact of a modest extra payment.
Frequently asked questions
How much interest can I save by paying an extra $100 a month on my mortgage?
The savings depend on your remaining balance, interest rate, and time left on the loan, but even $100/month extra on a typical 30-year mortgage can save tens of thousands of dollars in interest and cut 4–6 years off the loan term. The earlier in the loan you start, the greater the benefit, because interest is front-loaded in standard amortization. For a $250,000 balance at 7% with 25 years remaining, an extra $100/month can save over $30,000 in total interest. Use this calculator with your actual numbers to see the precise impact.
Is it better to make extra mortgage payments or invest that money instead?
The answer depends on your mortgage interest rate compared to your expected investment return after tax. If your mortgage rate is 7% and you expect stock market returns of 7–10% annually, investing may produce better long-term wealth — but investment returns are uncertain while mortgage payoff is guaranteed. Paying extra on the mortgage is a risk-free, tax-free return equal to your interest rate, which is attractive in high-rate environments. Many financial advisors suggest a hybrid approach: build an emergency fund and capture any employer retirement match first, then split extra funds between investing and mortgage payoff.
When does it make sense to refinance instead of making extra mortgage payments?
Refinancing makes sense when current rates are meaningfully lower than your existing rate — typically at least 0.5–1 percentage point lower — and you plan to stay in the home long enough to recoup the closing costs, usually 2–5% of the loan amount. If rates are similar to your current rate, making extra payments achieves interest savings without the upfront cost and paperwork of refinancing. Extra payments also offer flexibility: you can stop them anytime without consequence, unlike a new loan commitment. Compare the break-even period on refinancing against the guaranteed savings from extra payments using both this calculator and a refinance break-even calculator.