A mortgage is a significant financial commitment, and understanding how to optimize your payments can lead to substantial savings over time. This calculator helps you visualize the impact of making extra payments on your mortgage loan.
How the Standard Mortgage Calculation Works
The standard monthly mortgage payment is calculated using the following formula:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
M = Your total monthly mortgage payment (principal and interest)
P = The loan principal (the amount you borrowed)
i = Your monthly interest rate (annual rate divided by 12)
n = The total number of payments over the loan's lifetime (loan term in years multiplied by 12)
The Power of Extra Payments
When you make extra payments towards your mortgage, especially consistently, those additional funds go directly towards reducing your principal balance. This has a snowball effect:
Reduced Principal: Each extra dollar paid lowers the principal faster.
Less Interest Accrued: Since interest is calculated on the outstanding principal, a lower principal means less interest accrues over time.
Shorter Loan Term: By paying down the principal more quickly, you can potentially pay off your loan years ahead of schedule.
How This Calculator Works
This calculator first determines your standard monthly payment based on the principal amount, annual interest rate, and loan term. It then adds your specified Extra Monthly Payment to this standard amount to calculate the Total Monthly Payment.
The core of the calculation involves an amortization schedule simulation. We iteratively calculate the interest and principal portion of each payment. When an extra payment is made, it directly reduces the principal balance at the time of payment. This process continues until the loan balance reaches zero.
The calculator tracks:
The Total Interest Paid over the entire life of the loan with extra payments.
The Total Amount Paid (principal + total interest).
The new, shorter loan payoff time (in years and months).
The Time Saved by making extra payments compared to the original loan term.
When to Use This Calculator
This tool is invaluable for:
Homebuyers looking to understand the long-term benefits of making small additional payments.
Existing homeowners considering accelerating their mortgage payoff.
Anyone looking to plan their finances and identify potential savings on a large loan.
Even a modest extra payment can make a significant difference. Use this calculator to explore different scenarios and find the strategy that best fits your financial goals.
function calculateMortgage() {
var principal = parseFloat(document.getElementById("principal").value);
var annualInterestRate = parseFloat(document.getElementById("annualInterestRate").value);
var loanTerm = parseInt(document.getElementById("loanTerm").value);
var extraPayment = parseFloat(document.getElementById("extraPayment").value);
var errorDiv = document.getElementById("result");
errorDiv.innerHTML = "
Calculation Results
"; // Clear previous results
if (isNaN(principal) || principal <= 0 ||
isNaN(annualInterestRate) || annualInterestRate < 0 ||
isNaN(loanTerm) || loanTerm <= 0 ||
isNaN(extraPayment) || extraPayment 0) {
standardMonthlyPayment = principal * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments)) / (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1);
} else {
standardMonthlyPayment = principal / numberOfPayments; // Simple division if interest rate is 0
}
standardMonthlyPayment = standardMonthlyPayment || 0; // Ensure it's not NaN if calculation failed
var totalMonthlyPayment = standardMonthlyPayment + extraPayment;
// Amortization Calculation with Extra Payments
var balance = principal;
var totalInterestPaid = 0;
var months = 0;
var paymentsMade = [];
while (balance > 0) {
months++;
if (months > (loanTerm * 12 * 2)) { // Safety break for potential infinite loops
errorDiv.innerHTML += "Calculation exceeded maximum iterations. Please check input values.";
return;
}
var interestForMonth = balance * monthlyInterestRate;
var principalForMonth = totalMonthlyPayment – interestForMonth;
// If the total payment isn't enough to cover the interest, we need to handle it.
// This usually means the extra payment is too small or interest is 0.
if (principalForMonth < 0 && totalMonthlyPayment < interestForMonth) {
// If the loan is about to be paid off, the last payment might be smaller
if (balance + interestForMonth <= totalMonthlyPayment) {
principalForMonth = balance;
interestForMonth = totalMonthlyPayment – principalForMonth;
} else {
// This scenario should ideally not happen with typical inputs
// but ensures we don't get stuck.
principalForMonth = totalMonthlyPayment – interestForMonth; // This might make balance go negative if totalMonthlyPayment is too low
if (principalForMonth < 0) principalForMonth = 0; // Ensure principal payment is not negative
}
}
// Ensure we don't overpay the last payment
if (balance + interestForMonth < totalMonthlyPayment) {
principalForMonth = balance;
interestForMonth = (balance + interestForMonth) – principalForMonth; // Adjust interest if needed
if (interestForMonth {
calculateMortgage();
});