See how extra principal payments can shorten your loan term and save you money.
Your Savings Summary
Original Loan Payoff Time:
New Loan Payoff Time (with extra payments):
Total Interest Saved:
Total Payments Made:
Understanding Extra Principal Mortgage Payments
Paying extra on your mortgage principal can be one of the most effective ways to build equity faster, reduce the total interest paid over the life of your loan, and achieve financial freedom sooner. This calculator helps you visualize the impact of consistently making additional principal payments.
How Extra Principal Payments Work
When you make a mortgage payment, it's typically split between interest and principal. A standard amortization schedule dictates this split. However, if you designate any portion of your payment as "extra principal," that entire amount goes directly towards reducing your loan balance, bypassing the interest calculation for that specific portion. This has a snowball effect:
Reduced Principal: A lower principal balance means less interest accrues in subsequent periods.
Faster Equity: You own more of your home sooner.
Shorter Loan Term: By paying down the principal faster, you can often shave years off your mortgage.
The Math Behind the Calculator
This calculator uses standard mortgage amortization formulas and simulates the effect of additional principal payments. Here's a simplified breakdown:
Calculate Original Monthly Payment: The standard monthly mortgage payment (Principal & Interest) is calculated using the formula:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
M = Monthly Payment
P = Principal Loan Amount (We use the Loan Balance here)
i = Monthly Interest Rate (Annual Rate / 12)
n = Total Number of Payments (Remaining Term in Months)
Simulate Original Amortization: The calculator determines the total number of months it would take to pay off the loan with the original payment.
Simulate Amortization with Extra Principal: For each month, the calculator adds the `Extra Principal Payment` to the standard principal portion of the payment. It then recalculates the remaining balance. This process repeats until the loan balance reaches zero.
Calculate Savings:
New Term: The number of months it takes to pay off the loan with extra payments.
Interest Saved: Calculated by summing the interest paid in the original amortization schedule and subtracting the total interest paid in the new amortization schedule.
Total Payments Made: The sum of all monthly payments (original payment + extra principal) until the loan is paid off.
Note: This calculator assumes the extra payment is applied directly to the principal and is made consistently every month. It does not account for potential changes in interest rates (if not a fixed-rate mortgage) or additional fees.
When to Use This Calculator
Considering Prepayment: If you have extra funds from a bonus, tax refund, or increased income and want to see the benefit of putting it towards your mortgage.
Financial Planning: To project how extra payments can accelerate your debt-free date.
Understanding Loan Amortization: To gain a deeper insight into how mortgage payments are applied and the power of consistent principal reduction.
Making extra principal payments is a powerful strategy for homeowners looking to save money and pay off their mortgage faster. Use this calculator to empower your financial decisions.
function calculateExtraPrincipal() {
var loanAmount = parseFloat(document.getElementById("loanAmount").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var remainingTermMonths = parseInt(document.getElementById("remainingTermMonths").value);
var extraPayment = parseFloat(document.getElementById("extraPayment").value);
var resultDiv = document.getElementById("result");
var originalTermElem = document.getElementById("originalTerm");
var newTermElem = document.getElementById("newTerm");
var interestSavedElem = document.getElementById("interestSaved");
var totalPaymentsElem = document.getElementById("totalPayments");
// Input validation
if (isNaN(loanAmount) || isNaN(interestRate) || isNaN(remainingTermMonths) || isNaN(extraPayment) ||
loanAmount <= 0 || interestRate < 0 || remainingTermMonths <= 0 || extraPayment 0) {
originalMonthlyPayment = loanAmount * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, remainingTermMonths)) / (Math.pow(1 + monthlyInterestRate, remainingTermMonths) – 1);
} else {
originalMonthlyPayment = loanAmount / remainingTermMonths;
}
var tempBalance = loanAmount;
var tempMonths = 0;
var totalInterestAccrued = 0;
// Simulate original amortization to find exact original total interest
for (var i = 0; i < remainingTermMonths; i++) {
var interestThisMonth = tempBalance * monthlyInterestRate;
var principalThisMonth = originalMonthlyPayment – interestThisMonth;
// Handle potential floating point inaccuracies for the last payment
if (tempBalance – principalThisMonth < 0.01) {
principalThisMonth = tempBalance;
originalMonthlyPayment = principalThisMonth + interestThisMonth; // Adjust payment for last month
}
tempBalance -= principalThisMonth;
totalInterestAccrued += interestThisMonth;
tempMonths++;
if (tempBalance <= 0) break;
}
originalTotalInterest = totalInterestAccrued;
originalMonths = tempMonths; // This should ideally be remainingTermMonths if calculations are perfect.
// — Calculate New Loan Details with Extra Payment —
var newRemainingBalance = loanAmount;
var newMonthlyPayment = originalMonthlyPayment + extraPayment;
var newTotalInterest = 0;
var newTotalPaymentsMade = 0;
var newMonths = 0;
// Handle case where extra payment is so large it pays off in one go, or near one go.
if (newMonthlyPayment 0, but good check
alert("Extra payment is too high, resulting in non-positive monthly payment.");
resultDiv.style.display = 'none';
return;
}
while (newRemainingBalance > 0.01) {
var interestThisMonth = newRemainingBalance * monthlyInterestRate;
var principalThisMonth = newMonthlyPayment – interestThisMonth;
// Handle potential floating point inaccuracies for the last payment
if (newRemainingBalance – principalThisMonth remainingTermMonths * 3 && remainingTermMonths > 0) { // Safety break for extreme cases or potential infinite loops
alert("Calculation exceeded expected term. Please check your inputs.");
resultDiv.style.display = 'none';
return;
}
}
var totalInterestSaved = originalTotalInterest – newTotalInterest;
// Format results
originalTermElem.textContent = formatMonthsToYearsAndMonths(remainingTermMonths);
newTermElem.textContent = formatMonthsToYearsAndMonths(newMonths);
interestSavedElem.textContent = formatCurrency(totalInterestSaved);
totalPaymentsElem.textContent = formatCurrency(newTotalPaymentsMade);
resultDiv.style.display = 'block';
}
function formatMonthsToYearsAndMonths(totalMonths) {
if (totalMonths === undefined || totalMonths === null || isNaN(totalMonths)) {
return "N/A";
}
var years = Math.floor(totalMonths / 12);
var months = totalMonths % 12;
var result = "";
if (years > 0) {
result += years + " year" + (years !== 1 ? "s" : "");
}
if (months > 0) {
if (result.length > 0) {
result += " ";
}
result += months + " month" + (months !== 1 ? "s" : "");
}
if (result.length === 0) {
return "0 months";
}
return result;
}
function formatCurrency(amount) {
if (amount === undefined || amount === null || isNaN(amount)) {
return "$0.00";
}
return "$" + amount.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,');
}