Mortgage Payoff Calculator
Calculate how much time and interest you can save by making extra monthly payments.
Standard Monthly Payment:
Time Saved:
Total Interest Saved:
New Payoff Period:
How Does Early Mortgage Payoff Work?
A mortgage payoff calculator helps homeowners visualize the impact of adding extra principal payments to their monthly mortgage bill. When you pay more than the required amount, the excess goes directly toward reducing the loan's principal balance. This reduces the base upon which interest is calculated, creating a compounding effect of savings over the life of the loan.
Real-World Example:
If you have a $250,000 loan balance at 6.5% interest with 25 years remaining, your base payment is roughly $1,689. By paying an extra $200 per month, you could shave 5 years and 2 months off your mortgage and save over $58,000 in total interest.
If you have a $250,000 loan balance at 6.5% interest with 25 years remaining, your base payment is roughly $1,689. By paying an extra $200 per month, you could shave 5 years and 2 months off your mortgage and save over $58,000 in total interest.
Key Benefits of Accelerated Payments
- Reduced Interest Expense: Interest is calculated on your remaining balance. Lower balance means less interest paid every single month.
- Increased Equity: You own a larger percentage of your home faster, which is beneficial if you plan to sell or take out a HELOC.
- Financial Freedom: Eliminating a mortgage payment is one of the most significant steps toward a secure retirement.
Should You Pay Off Your Mortgage Early?
While saving on interest is great, consider your "opportunity cost." If your mortgage interest rate is 3% and you could earn 7% in the stock market, mathematically it might be better to invest. However, if your rate is high (above 6%), the "guaranteed return" of paying down debt is often the smartest financial move.