Mortgage payoff calculator
Making an extra payment and shortening the term saves more interest than lowering the payment, because the principal stops accruing interest sooner. On a $300,000 mortgage at 6.5% over 30 years, putting $15,000 toward the balance while keeping the same payment saves roughly $35,000 in interest and pays off the loan nearly three years early.
Formula: Payment = P × i / (1 − (1 + i)^−n) (standard amortization). After an extra payment, the remaining balance drops and either the term or payment is recalculated.
Mortgage payoff calculator
Calculate your standard monthly payment and see what an extra lump-sum payment saves, whether you shorten the term or lower the payment.
Estimate calculated in your browser. No data is sent or stored.
How to use it
- Enter your outstanding balance. Not the original loan amount — what you still owe today.
- Enter the rate and remaining term. The annual rate and the years left on the loan.
- Simulate an extra payment. Enter an amount you could put toward the loan and choose to shorten the term or lower the payment.
- Compare the savings. The interest-saved line is the risk-free return on that extra payment.
Shorten the term or lower the payment
Shortening the term maximizes interest savings because it removes the final full payments. Lowering the payment eases monthly cash flow and reduces risk if your income is variable. The choice isn't purely financial: if your current payment is tight, lowering it can avoid bigger problems.
- Shorten the term: maximum savings, same monthly payment
- Lower the payment: less savings, more monthly breathing room
- On adjustable-rate loans, paying down before a rate reset has a bigger effect
When to pay down debt versus invest
Paying down a mortgage early is equivalent to a guaranteed return equal to your mortgage rate. If your rate is 6.5%, investing only makes sense if you expect to beat that net of taxes and fees while taking on risk. With older, low-rate mortgages, investing usually wins; with today's higher rates, paying down often does.
Frequently asked questions
- Is there a prepayment penalty?
- Most US mortgages originated after 2014 have no prepayment penalty, but some jumbo or non-conforming loans do. Check your note before making an extra payment: this calculator doesn't account for penalties.
- What amortization method does this use?
- The standard fixed-payment schedule: the payment stays constant while the interest portion falls and the principal portion rises each month. That's why paying down early saves far more than doing it near the end.
- Does this work for an adjustable-rate mortgage?
- Yes, as an approximation: enter today's rate. Since it's adjustable, the result changes at each rate reset.