Mortgage Extra Payment Calculator

What this calculator answers

How much sooner your mortgage is paid off, and how much interest you save, if you pay extra principal: a fixed amount every month, a lump once a year, a single lump sum, or all three together. It starts from what your statement shows today, the balance and the rate, rather than the original loan, and shows the schedule with and without the extra payments side by side. It also works out the bi-weekly equivalent, what a recast would do to your payment, the extra needed to finish by a target, and when you could ask to drop PMI.

How to use it

• Current balance: the principal still owed, from your latest statement. 250,000, $250,000 and 250k all work.
• Interest rate: the note rate on your statement or note, not the APR.
• Time left: the remaining term, in years and months until the last scheduled payment. If you don’t know it, leave it blank and enter your payment: the months left are worked out from it.
• Monthly P&I (optional): your principal and interest payment, without the escrow for property tax and insurance or any mortgage insurance. Left blank, the calculator uses the payment the balance, rate and term give, and says so under the field.
• Extra monthly and Starting month, Extra yearly and Yearly month, One-time extra and In month: any mix of the three. Month 1 is your next payment, so a yearly month of 12 means payments 12, 24, 36 and so on.
• Next payment date (optional) adds calendar dates to the payoff and the schedules. Original home value (optional) shows when the balance reaches 80% of it, for PMI.

Results update as you type. The Try buttons load the cases worked through below: the same $2,400 a year paid once, a $10,000 lump sum, all three kinds together, and a payment with no known term. To weigh plans, press Save for comparison, change the extras and save again; each saved plan shows its change in interest and payoff time against the first.

Worked example: $250,000 balance, 25 years left, $200 extra a month

The example on the calculator has a fixed rate of 6.25%, an example figure rather than a current rate, and $200 of extra principal with every payment from the next one.

1. Regular payment: i = 6.25% ÷ 12 = 0.00520833 and n = 25 × 12 = 300, so M = $250,000 × 0.00520833 ÷ (1 − 1.00520833^−300) = 1,649.1734, which rounds to $1,649.17.
2. Month 1: interest is $250,000 × 0.00520833 = $1,302.08, so $347.09 of the payment reduces the balance. The $200 extra goes straight to principal after it, leaving $249,452.91 instead of $249,652.91.
3. Month 2: interest is charged on the lower balance: $1,299.23 instead of $1,300.28, $1.05 less. The gap grows every month, because each month starts from a lower balance than the one before.
4. Without extra payments: 300 payments, the last $1,651.84, and $244,753.67 of interest.
5. With $200 a month: 235 payments (19 years 7 months), the last $819.12, with $46,800.00 of extra principal and $183,524.90 of interest.
6. Saved: $244,753.67 − $183,524.90 = $61,228.77 of interest, and 65 payments: 5 years 5 months sooner.

How much do extra mortgage payments save?

Each extra dollar stops being charged interest for every month left on the loan, so the saving depends on the rate, the time left and how early the extra is paid. It isn’t proportional to the amount: a larger extra ends the loan sooner, which leaves fewer months to save on. For the example loan:

All three kinds together, $200 a month plus $2,400 with payments 12, 24, 36 … and $10,000 with the next payment (the All three kinds button), pay the example loan off in 15 years 3 months (183 payments) and save $111,479.81. The Amounts table under the results does the same for your loan. Interest saved adds up dollars from many years apart, so it is not a rate of return: each extra dollar earns the mortgage rate, for as long as the loan would otherwise have run.

How the calculator works it out

When the remaining term is entered, the regular payment is the level payment that repays the balance over it:

$$M = B \times \frac{i}{1 - (1 + i)^{-n}}$$

• $M$ is the monthly principal and interest payment, rounded to the cent.
• $B$ is the current balance.
• $i$ is the monthly rate: the yearly rate as a decimal ÷ 12.
• $n$ is the number of payments left.

Then each month, interest is the balance × $i$, rounded to the cent; the payment covers it first and the rest reduces the balance; the extra for that month is taken off after that, never more than what is still owed. The last payment is whatever clears the balance. Both schedules, with and without extra payments, follow the same rules, so the difference between them is the extra payments alone. In a spreadsheet, =PMT(rate/12, months, -balance) gives the payment before rounding, and =NPER(rate/12, -(payment+extra), balance) the number of payments with a level monthly extra.

Paying extra every month vs. one extra payment a year

The timing matters as much as the total. The same $2,400 a year saves the most when it is paid at the start of each year and the least when it is paid at the end, because a dollar paid sooner stops being charged interest sooner:

The Timing table under the results compares these three for your own monthly extra.

Do bi-weekly payments pay off a mortgage faster?

Yes, because they add up to one extra payment a year. Paying half the payment every two weeks makes 26 half-payments, or 13 full payments, a year instead of 12. Adding 1/12 of the payment to every monthly payment gives the same yearly total without changing how you pay. In the example that is $1,649.17 ÷ 12 = $137.43 a month, which pays the loan off in 21 years (252 payments) and saves $45,966.08. The Use $137.43 a month button under the results fills it in for your loan. If a servicer offers a bi-weekly plan, ask whether it charges a fee and when it applies each half-payment.

Does paying extra lower my monthly payment?

No. Under the Fannie Mae/Freddie Mac uniform fixed-rate note (Form 3200), a partial prepayment changes neither the due date nor the amount of the monthly payment unless the lender agrees in writing. Extra principal shortens the loan instead. Your own note may be worded differently, so check it.

A lower payment takes a recast, where the lender recalculates the payment on the smaller balance over the months left. For a $10,000 lump sum with the next payment (the $10,000 lump sum button), the balance after month 1 is $239,652.91:

The recast frees $66.06 a month; keeping the payment saves $24,419.46 more interest. The calculator shows this comparison whenever a one-time extra is entered. Your note may not require the lender to recast, so ask whether it does, and about any fee or minimum amount.

How much extra to pay to be mortgage-free by a date

The Pay off by table gives the smallest extra each month, to the cent, that repays the loan within each target, starting with the next payment. For the example loan:

One cent less than any of these leaves a small final payment the month after the target, because each month’s interest is rounded to the cent. With a next payment date, the table also shows the month of the last payment.

If you know your payment but not the months left

Enter the balance, the rate and your principal and interest payment, and leave the time left blank. At $1,800 a month on the example’s $250,000 at 6.25% (the Term unknown button, which enters $1,800), n = −ln(1 − B × i ÷ M) ÷ ln(1 + i) = 247.38, so the loan takes 248 payments (20 years 8 months), the last $690.48. Adding $200 a month brings that to 203 payments (16 years 11 months) and saves $39,961.24 of interest.

When both the term and a payment are entered, the payment wins and the schedule runs until the balance is repaid. If the two don’t fit together, a note says so: a payment that includes escrow repays the loan much faster than the term, so the loan looks shorter than it is and the extra payments seem to save less than they would.

When you can ask to cancel PMI

With private mortgage insurance on a conventional loan, you can ask your servicer to cancel it once extra payments bring the balance to 80% of the home’s original value: generally the lower of the purchase price and the appraisal when you bought it (the appraisal at the refinance, if you refinanced). Enter that value to see the month both ways. If the example home’s original value was $300,000, the balance reaches $240,000 with payment 18 with the extra $200, instead of payment 27 without it.

The request must be in writing, and you need a good payment history, no second mortgage or other junior lien, and possibly evidence that the home’s value hasn’t fallen below the original value. PMI also ends automatically on the date the balance is scheduled to reach 78%; extra payments bring forward the date you can ask, not that one. FHA and VA loans follow different rules.

Before you prepay: penalties, emergency savings and higher-rate debts

• Prepayment penalties. Not every mortgage has one. Where one exists, it usually applies to paying off the whole loan within the first few years, sometimes to a large lump sum, and not normally to small extra payments. Check your note or ask your servicer.
• Emergency savings. Money sent to principal is hard to get back, and your required payment stays the same afterward. An emergency fund is cash set aside for unplanned bills and lost income; how much you need depends on your situation.
• Higher-rate debt. Paying off high-interest debt, such as a credit card balance, pays off better than almost any investment, and with less risk. A dollar sent there instead earns that debt’s rate, not the mortgage rate.

How to make sure extra money goes to principal

The uniform fixed-rate note sets out how prepayments work:

• Say so in writing. Tell the lender the payment is a prepayment: use your servicer’s principal-only option, or write “apply to principal” with the payment.
• Be current first. A payment can’t be designated as a prepayment while regular monthly payments are past due.
• Interest can come first. The lender may apply part of a prepayment to interest accrued on the prepaid amount before reducing the principal.

Then check the next statement: the balance should fall by the regular principal plus your extra.

Reading the result

• Interest saved is the interest on the original schedule minus the interest with the extra payments. The line under it gives both payoff times.
• The six figures give the payoff both ways, the time saved, the total interest, the extra principal paid and the total paid. Total paid is always the balance plus interest, so it falls by exactly the interest saved.
• Bi-weekly payments, the simple way shows what 1/12 of the payment each month would do, with a button that uses it.
• Lower the payment instead? (recast) appears with a one-time extra and compares keeping the payment with a recast.
• When you can ask to cancel PMI appears when you enter the original home value.
• How this was calculated shows the payment, the first month’s interest, how the first extra changes the balance and the next month’s interest, and the totals, with a spreadsheet version.
• The chart shows both balances falling, year by year (month by month for loans with three years or less left).
• Both schedules side by side lists the extra paid, the interest and the balance each year or month for both schedules, and the interest saved so far. Download either view as a CSV file.
• What if has three tables: other monthly amounts, the extra needed to pay off by a target, and the same yearly amount paid monthly or once a year.

Assumptions and limitations

• Fixed rate. The rate stays the same until the loan is repaid, so an adjustable-rate loan’s figures change after each reset.
• Monthly interest. Interest is the balance × the rate ÷ 12 each month, rounded to the cent, and extras are applied on the due date. A servicer that posts payments on other days, or first charges interest on the prepaid amount, can differ by small amounts.
• Principal and interest only. Escrow for tax and insurance, and mortgage insurance, are left out; extra principal doesn’t change them.
• No penalties, taxes or alternatives. Prepayment penalties, tax effects such as the mortgage interest deduction, and what the money could earn elsewhere are not modeled.
• Undiscounted dollars. Interest saved in 20 years counts the same as a dollar today.

The result is an educational estimate, not financial, tax or lending advice. Your servicer’s payoff figures are the final word.

Common mistakes

• Entering the whole monthly payment as P&I. If the payment includes escrow for taxes and insurance, the schedule treats that money as principal: the loan looks shorter than it is, and the extra payments seem to save less than they would. Enter only the principal and interest part of your payment, or leave the field blank.
• Starting from the original loan. Enter today’s balance and the months left, not the amount you borrowed and the original 30 years; otherwise the savings are worked out for payments you have already made.
• Skipping a payment after paying extra. A partial prepayment doesn’t move the due date, so the next regular payment is still due.
• Expecting a lower payment. Extra principal shortens the loan. Only a recast or a refinance lowers the required payment.
• Entering the APR. The APR adds points and fees to the interest rate, so it is usually higher. Interest is charged at the note rate, which is the one to enter.