About the Mortgage Payoff Calculator
A mortgage payoff calculator shows what happens when you pay more than the lender asks. Because every extra dollar goes straight against principal, it removes all the future interest that dollar would have accrued — which is why modest extra payments can cut years off a loan and tens of thousands off its total cost.
The formula
n = −log(1 − (B · r) / Pmt) / log(1 + r)n is the number of months remaining, B is the current balance, r is the monthly interest rate, and Pmt is the total monthly payment including your extra amount.
How to use this calculator
- 1Enter your Remaining Balance ($). The field starts at
280000, which you can overwrite. - 2Enter your Interest Rate (%). The field starts at
6.5, which you can overwrite. - 3Enter your Regular Monthly Payment ($). The field starts at
1770, which you can overwrite. - 4Enter your Extra Monthly Payment ($). The field starts at
200, which you can overwrite. - 5Read the result straight away — it recalculates as you type, so there is no button to press. Use Share to copy a link that reopens the page with your exact numbers filled in.
Worked example
| Input | Value |
|---|---|
| Remaining Balance ($) | 280000 |
| Interest Rate (%) | 6.5 |
| Regular Monthly Payment ($) | 1770 |
| Extra Monthly Payment ($) | 200 |
Result
Payoff in: 272 months
Saved: 87 months early
Interest saved: $101,199.25
Those are the values the page loads with, so you can reproduce this result yourself and then change one field at a time to see what drives the outcome.
Understanding your result
The saving is non-linear, which is what surprises people. Adding 10 percent to your payment does not shorten the loan by 10 percent — it shortens it by considerably more, because the extra principal compounds its own benefit. Every dollar off the balance reduces next month's interest, which frees slightly more of the fixed payment for principal, and so on.
The leverage depends heavily on where you are in the term and how high your rate is. Early in a high-rate loan, extra payments are close to a guaranteed, tax-free return equal to your mortgage rate. Late in a low-rate loan, the same money often does more good in a retirement account or a high-yield savings account.
Things worth knowing
- Tell your servicer in writing that extra funds are to be applied to principal. Otherwise they may be held as an advance payment, which saves nothing.
- Clear higher-interest debt first. Paying down a 20 percent credit card beats overpaying a 6 percent mortgage every time.
- Check for prepayment penalties before you start. They are uncommon on modern US mortgages but not extinct, and they do appear on some other loan types.
- Keep an emergency fund intact. Home equity is illiquid — you cannot spend it in a crisis without borrowing against it again.
- Biweekly payments achieve much the same thing: 26 half-payments a year equals 13 monthly payments instead of 12.
Frequently asked questions
Is it better to overpay the mortgage or invest the money?+
Compare your mortgage rate to the return you realistically expect after tax. Overpaying a 7 percent mortgage is a risk-free 7 percent, which is hard to beat. Against a 3 percent mortgage, long-term investing has usually won. Neither answer is universal — your risk tolerance matters as much as the arithmetic.
Will extra payments lower my monthly bill?+
No. They shorten the loan rather than reduce the payment. If you want a lower monthly payment instead, ask your servicer about recasting, which re-amortises the reduced balance across the original term for a small fee.
Does one extra payment a year make a real difference?+
On a 30-year mortgage it typically retires the loan four to five years early and saves a substantial share of total interest. The exact figure depends on your rate and how early you start.
Should I overpay if I plan to move soon?+
Probably not. Extra principal converts cash into home equity you only recover on sale, minus selling costs. If a move is likely within a few years, liquid savings are usually more useful.