The formula
How it works
See how much time and interest you save by paying a little extra on your mortgage each month. Because interest builds on the balance, even a small overpayment can knock years off the loan.
FAQ
Why does a small extra payment save so much?
Every extra dollar goes straight to the principal, which is what future interest is charged on. Cutting the balance early stops years of interest from ever accruing, so the savings snowball over the life of the loan.
Is it better to overpay or invest?
It depends on the rates. If your mortgage rate is higher than what you could reliably earn by investing, overpaying is the safer win. Also check your mortgage allows overpayments without penalties.
Should I make extra payments monthly or as a lump sum?
Either works, since interest is calculated on the balance however you reduce it, but small consistent extra payments are easier to sustain than saving for one big annual payment. Choose whichever habit you will actually keep up.
Will my lender automatically apply extra payments to principal?
Not always — some lenders apply extra amounts to next month’s payment or future interest unless you specify otherwise. Check with your lender or mark the payment clearly as an additional principal payment.
Does refinancing to a shorter term save more than just overpaying?
A shorter-term refinance locks in a faster payoff and often a lower rate, but comes with closing costs and a higher required payment. Overpaying a current loan keeps flexibility, since you can stop the extra payments anytime without penalty.
How much extra do I need to pay to cut my loan in half?
It varies with your rate and remaining term, but doubling your rate of principal paydown roughly in the loan’s early years typically requires an extra payment close to your current principal-and-interest amount. This calculator lets you test different extra amounts to see the effect.
Does paying extra reduce my required monthly payment?
No, your required monthly payment stays the same with most mortgages — extra payments shorten the loan term and cut total interest, not the bill due each month, unless you specifically request loan recasting from your lender.
About the mortgage payoff calculator
This calculator shows how paying extra toward your mortgage each month shortens the loan and slashes the total interest. A mortgage is usually the biggest debt anyone carries, and most of an early payment goes to interest rather than the balance. Overpaying flips that: the extra goes entirely to the principal, so it saves far more interest than its size suggests. This tool puts a number on that saving.
How to use it
Enter your current balance, your interest rate, your normal monthly payment, and the extra amount you would add each month. The calculator compares paying off the loan with and without the extra, showing the months and interest saved. For example, adding $200 a month to a $250,000 balance at 6% can save years of payments and tens of thousands in interest, depending on your current payment.
The formula
The calculator projects the loan month by month. Each month, interest of is added and the payment is subtracted, until the balance reaches zero. It does this once with your normal payment and once with the extra added, and the difference in total interest is your saving: . The time saved is the difference in the number of months.
Where it is used
Homeowners use it to see whether rounding up their payment or adding a fixed extra is worth it, and to set a goal for being mortgage-free sooner. It helps decide between overpaying and other uses of spare cash, and it is a motivating way to visualise progress. Anyone with a mortgage that allows penalty-free overpayments can use it to plan a faster, cheaper path to owning their home outright.