Payoff calculator

How it works

Extra principal is an optional add-on to a required mortgage payment. The required P&I is unchanged. The extra dollars go entirely to balance after that required split. Because next month’s interest is charged on a smaller balance, more of each later required payment becomes principal. The loan ends earlier, and the interest column shrinks.

This calculator builds two schedules from the same loan amount, rate, and term. The baseline uses extra principal of zero. The comparison adds the monthly extra you type. It then reports interest saved, months saved, and the two payment totals. The table is the same comparison in compact form; the area chart follows the faster payoff path.

The comparison is mechanical. It does not ask whether those extra dollars would earn more in a reserve, a retirement account, or by paying a higher-rate card. Opportunity cost is real and personal. The CFPB’s mortgage tools are a better home for questions about loan features and servicing rights; this page only shows what prepayment does to amortization.

Prepayment does not change the note rate. It also does not, by itself, remove PMI on a different schedule than the balance-based rule on the mortgage calculator. If PMI is your goal, use that tool with a PMI line, or ask the servicer how they measure loan-to-value.

The formula

Required P&I is the same amortizing payment used elsewhere. The extra schedule stops when the balance crosses zero, so the number of rows is the payoff term.

M = P × r / (1 − (1 + r)^−n)
interest = remaining balance × r
required principal = min(M − interest, balance)
interest saved = baseline interest − extra-payment interest
months saved = baseline months − extra months

There is no closed-form “months saved” that stays honest once you also want a dollar interest gap, because the last payment is truncated. Summing the two schedules keeps the last month exact.

Biweekly payment programs, recasts, and lump sums on a single anniversary are different mechanics. This model is a constant extra every month.

Worked example

Those extra $200s are not free. Over 265 months you send about $53,000 of extra principal. The interest you do not pay is larger than that sum in this particular example, which is what a 6.5% note rate would lead you to expect, but the comparison still ignores taxes and whatever else you could have done with the $200.

If extra is zero, both schedules match and the saved figures are zero. That is a sanity check, not a recommendation to skip prepayment.

Assumptions and limits

The loan is fixed-rate and fully amortizing. Taxes, insurance, and PMI are omitted so the extra dollars are visible against P&I only. If your extra payment is applied to escrow by mistake, the schedule here will not match the servicer.

Some notes restrict prepayment or charge a penalty in the early years. Read the note. This tool assumes extra principal is allowed and applied immediately.

Round-off on a real statement can differ by a few cents from the mathematical payment. Servicers also choose how they apply an overage when a payment does not match their posted extra-principal code. Confirm the extra is coded as principal.

Interest you no longer pay may change a mortgage-interest deduction in later years; see IRS Publication 936. That is not modeled.

Outputs are estimates for education. They are not advice to prepay instead of investing, refinancing, or holding cash.

Frequently asked questions