Mortgage Payoff Calculator
Your Accelerated Results
Accelerate Your Path to Debt Freedom
Paying off a mortgage early is one of the most effective ways to build wealth and ensure long-term financial security. Our Mortgage Payoff Calculator helps you visualize exactly how much time and money you can save by adding just a small amount to your monthly principal payment.
How Extra Payments Save You Money
When you make a standard mortgage payment, a significant portion of that money goes toward interest, especially in the early years of the loan. By contributing an extra monthly payment directed toward the principal, you reduce the total balance upon which interest is calculated. This creates a compounding effect: less principal leads to less interest, which means more of your future regular payments go toward the principal.
Real-World Example
Imagine you have a $250,000 balance on a mortgage with a 6.5% interest rate. Your monthly principal and interest payment is roughly $1,580. If you pay only that amount, it might take you 30 years to pay off. However, by adding just $200 extra per month:
- You could save over $85,000 in total interest.
- You could pay off the loan roughly 7 years sooner.
- You effectively earn a "guaranteed return" equal to your interest rate on every extra dollar paid.
Tips for Early Mortgage Payoff
Before committing to extra payments, consider these strategies:
- Check for Prepayment Penalties: Most modern mortgages don't have them, but it's always worth verifying with your lender.
- Automate Your Payments: Set up a recurring transfer so you don't have to think about making the extra payment each month.
- Use Windfalls: Apply tax refunds, work bonuses, or inheritance directly to the principal for a massive reduction in interest.
- Recast Your Mortgage: If you make a large lump-sum payment, ask your lender about "recasting" to lower your monthly payment while keeping the same interest rate.