See how extra payments reduce your loan term and save you thousands.
Standard Monthly Principal & Interest:$0.00
Time to Payoff (Standard):0 Years
New Time to Payoff:0 Years
Total Interest Saved:$0.00
Time Saved:0 Months
Maximize Your Wealth: The Strategic Value of Extra Mortgage Payments
For most homeowners, a mortgage is the largest debt they will ever carry. The total cost of borrowing, often obscured by the focus on "monthly payments," can amount to hundreds of thousands of dollars in interest alone over a 30-year term. This calculator is designed to reveal the financial impact of making additional principal payments and to help you strategize your path to becoming debt-free.
Understanding Mortgage Amortization
Mortgages use an amortization schedule, which is a fancy way of saying the ratio of principal to interest changes over time. In the early years of your loan, the vast majority of your payment goes toward interest, not paying down your home. This is why the loan balance decreases so slowly at first.
By making an extra payment applied directly to the principal, you skip the interest that would have accrued on that specific amount of money for the remainder of the loan term. This creates a "snowball effect" where your loan balance drops faster, reducing future interest charges, and shortening the loan term.
Why Even Small Extra Payments Matter
You do not need to double your payment to see results. As demonstrated by the calculations above, adding just $50 or $100 a month can shave years off your mortgage term. Here is why this strategy works:
Interest Reduction: Interest is calculated based on the outstanding balance. Lower balance = lower interest charged next month.
Equity Building: Every extra dollar is 100% equity in your pocket immediately.
Financial Freedom: Eliminating a mortgage payment years early frees up significant cash flow for retirement or other investments.
Considerations Before Prepaying
While paying off a mortgage early is a guaranteed return on investment equal to your interest rate, it is important to consider your overall financial picture. Before aggressively paying down your mortgage, ensure you have an emergency fund, have paid off higher-interest debt (like credit cards), and are contributing to tax-advantaged retirement accounts. However, for those seeking the peace of mind of a paid-off home, the extra payment strategy is a powerful tool.
How to Use This Calculator
Enter your current loan balance (not the original amount), your current interest rate, and the years remaining on your term. Then, input a hypothetical monthly extra payment to see exactly how much interest and time you can save.
function calculateMortgageSavings() {
// 1. Get Input Values
var loanBalance = parseFloat(document.getElementById("mpcLoanAmount").value);
var interestRate = parseFloat(document.getElementById("mpcInterestRate").value);
var remainingYears = parseFloat(document.getElementById("mpcRemainingTerm").value);
var extraPayment = parseFloat(document.getElementById("mpcExtraPayment").value);
// 2. Validation
if (isNaN(loanBalance) || isNaN(interestRate) || isNaN(remainingYears)) {
alert("Please enter valid numbers for Loan Balance, Interest Rate, and Remaining Term.");
return;
}
if (isNaN(extraPayment)) {
extraPayment = 0;
}
// 3. Basic Setup
var monthlyRate = (interestRate / 100) / 12;
var totalMonths = remainingYears * 12;
// 4. Calculate Standard Monthly Payment (Principal + Interest)
// Formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
var standardPayment = 0;
if (interestRate === 0) {
standardPayment = loanBalance / totalMonths;
} else {
standardPayment = loanBalance * (monthlyRate * Math.pow(1 + monthlyRate, totalMonths)) / (Math.pow(1 + monthlyRate, totalMonths) – 1);
}
// 5. Calculate Total Interest WITHOUT Extra Payments
var totalInterestStandard = (standardPayment * totalMonths) – loanBalance;
// 6. Calculate Amortization WITH Extra Payments
var balance = loanBalance;
var monthsWithExtra = 0;
var totalInterestWithExtra = 0;
// Loop until balance is paid off
while (balance > 0) {
var interestForMonth = balance * monthlyRate;
var principalForMonth = standardPayment – interestForMonth;
// If the remaining balance is less than the standard payment
if (balance 0) {
var actualExtra = (balance 1000) break;
}
// 7. Calculate Savings and Differences
var interestSaved = totalInterestStandard – totalInterestWithExtra;
var monthsSaved = totalMonths – monthsWithExtra;
var yearsSavedVal = Math.floor(monthsSaved / 12);
var remainingMonthsSaved = Math.round(monthsSaved % 12);
// New Time in Years/Months
var newYears = Math.floor(monthsWithExtra / 12);
var newMonths = monthsWithExtra % 12;
// 8. Output Formatting
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
minimumFractionDigits: 2
});
// 9. Display Results
document.getElementById("mpcStdPayment").innerHTML = formatter.format(standardPayment);
document.getElementById("mpcStdTime").innerHTML = remainingYears + " Years";
var newTimeString = newYears + " Years";
if (newMonths > 0) newTimeString += ", " + newMonths + " Months";
document.getElementById("mpcNewTime").innerHTML = newTimeString;
document.getElementById("mpcInterestSaved").innerHTML = formatter.format(Math.max(0, interestSaved));
var timeSavedString = yearsSavedVal + " Years";
if (remainingMonthsSaved > 0) timeSavedString += ", " + remainingMonthsSaved + " Months";
document.getElementById("mpcTimeSaved").innerHTML = timeSavedString;
// Show result box
document.getElementById("mpcResults").style.display = "block";
}