Skip to content
Finance & LoansmortgageUnited States only

Mortgage Payoff Calculator

What paying extra does to a loan. Every extra dollar goes entirely to principal, so the effective return on paying early is the loan rate itself, guaranteed and risk free.

Also called: prepayment calculator, pay off mortgage early.

$
%
$
$
Months cut from the loan
48

Paying 300 extra a month clears the loan 48 months early and saves $60,330.27 in interest. The loan ends after 192 months instead of 240.

Interest saved
$60,330.27
Months to clear
192
Interest without extra payments
$263,959.54
Interest with them
$203,629.27
Contractual payment
$2,433.16
Total extra paid in
$57,600.00
Effective return on the extra money
6.75%
How this is calculated

An estimate, not an offer or a guarantee. Projected returns assume the rate you entered holds for the whole term, which no market does.

Year by year

YearPrincipalInterestBalance
1$11,551$21,247$308,449
2$12,355$20,443$296,094
3$13,216$19,582$282,878
4$14,136$18,662$268,742
5$15,120$17,678$253,623
6$16,173$16,625$237,450
7$17,299$15,499$220,151
8$18,503$14,295$201,648
9$19,792$13,006$181,856
10$21,170$11,628$160,686
11$22,644$10,154$138,043
12$24,220$8,578$113,823
Method and background

This is what the calculation gives for the numbers you entered. It is an estimate, not advice, and it knows nothing about your situation beyond those numbers. Rules for United States change on a published schedule; the effective date is shown on every rule-based tool.

How this is calculated

The contractual payment is fixed, so anything above it reduces principal directly and every future month of interest on that principal disappears with it. That makes prepayment an investment returning exactly the loan rate with no risk, which is why it beats a deposit paying less. Because interest is front loaded, the same extra payment made early saves far more than made late, and a lump sum now is worth more than the same amount spread over a year.

the number of periods a larger payment needs to clear the balance
P
Balance (currency)
E
Payment including the extra (currency)
i
Monthly rate (decimal)

Worked examples

Each of these is asserted on every build. If a change to the engine ever moved one of these answers, the build would fail before the page could print it.

three hundred extra a month

Balance outstanding
$320,000.00
Interest rate
6.75%
Months remaining
240
Extra paid each month
$300.00
One-off lump sum now
$0.00

Months cut from the loan48

PMT(6.75%/12, 240, -320000) = 2433.16, and a separate month-by-month run at that payment accrues 263,959.56 of interest. At 2733.16 a month the balance clears in 191.58 periods by DRV-002, so 192 payments, 48 months saved and 203,629.22 of interest, a saving of 60,330.34. Both figures come from the same independent Python simulation, which is what makes the difference meaningful. The tolerance covers the few cents between that and the engine, which rounds each month to cents before summing, as a real statement does.

Open this example

no extra changes nothing

Balance outstanding
$320,000.00
Interest rate
6.75%
Months remaining
240
Extra paid each month
$0.00
One-off lump sum now
$0.00

Months cut from the loan0

boundary: with nothing extra the accelerated schedule is the contractual one, so both differences must be exactly zero

Open this example

Method and limits

What it assumes

  • No prepayment penalty, which many fixed-rate loans do charge.
  • The extra payment continues every month until the loan clears.

What it deliberately does not model

  • Money in a loan is not accessible. An emergency fund should come before prepayment.
  • Where mortgage interest is tax deductible the effective return is lower than the headline rate.

Formula version 1.0.0 · definition 1.0.0 · United States · Report a problem with this calculator

Frequently asked questions

Should I prepay or invest?
Paying early returns the loan rate, guaranteed. Investing might return more and might not. On a 6.75% mortgage, paying extra is a risk-free 6.75% after tax, which is a high bar for a taxable account to clear.
Does the timing matter?
Enormously. Interest is charged on the reducing balance, so an early prepayment removes interest for every remaining month. The same amount in the final year saves almost nothing.