Mortgage Payoff Calculator
See how much you can save by paying extra on your mortgage. Calculate your interest savings, early payoff timeline, and build equity faster — all in seconds.
Enter Your Mortgage Details
Enter your current mortgage balance or original loan amount
Even $50-100 extra per month can save thousands!
How to Use This Calculator
Enter Loan
Add Rate
Extra Payment
See Savings
How It Works
P × (r(1+r)ⁿ) ÷ ((1+r)ⁿ-1)
Standard amortization formula
All → Principal
Bypasses interest entirely
Example Savings
*At 6.5% interest, 30-year term
Why Pay Extra?
- Save thousands in interest payments
- Build home equity faster
- Own your home years sooner
- Gain financial freedom earlier
- Reduce total cost of homeownership
How Do Extra Mortgage Payments Actually Work?
When you make your regular monthly mortgage payment, a significant portion goes toward interest — especially in the early years. This is because mortgage interest is calculated on your remaining principal balance. The lower your balance, the less interest you pay each month.
Here is where extra payments become powerful: every dollar you pay above your required monthly payment goes directly toward reducing your principal. Unlike your regular payment, which is split between interest and principal, extra payments bypass the interest entirely.
This creates a compounding effect. When you reduce your principal, the next month's interest calculation is based on a smaller balance. More of your regular payment then goes toward principal, accelerating your payoff even further.
How Extra Payments Bypass Interest
Extra payments go straight to principal, reducing your balance immediately and saving interest over time.
Real Numbers: What Can You Actually Save?
Let us look at a realistic example to see the power of extra payments in action. These numbers represent a typical mortgage scenario that millions of homeowners face.
Example Scenario
Results:
$86,000
Interest Saved
7 Years
Time Saved
23 Years
New Payoff
Visual Timeline: Standard vs. Accelerated Payoff
Different Strategies for Making Extra Payments
You do not need to commit to the same extra amount every month. Different strategies work for different financial situations and personal preferences.
Monthly Extra
Add a fixed amount every month. Even $50 makes a difference over time. Most effective for long-term savings.
Annual Lump Sum
Use tax refunds or bonuses for one large payment. One extra payment per year can shave 4-5 years off.
Biweekly Payments
Pay half every two weeks. 26 half-payments = 13 full payments per year instead of 12.
Round-Up Method
Round your payment up to nearest $50 or $100. Automatic approach requiring no extra thought.
Should You Pay Off Your Mortgage or Invest?
Pay Off Mortgage If:
- • Your interest rate is 6% or higher
- • You value guaranteed, risk-free returns
- • You are within 10-15 years of retirement
- • You want the psychological benefit of being debt-free
Consider Investing If:
- • Your interest rate is below 4%
- • You have a long time horizon (15+ years)
- • You are comfortable with market volatility
- • You have not maxed out retirement accounts
The Bottom Line: If your mortgage rate is 6.5%, paying extra gives you a guaranteed 6.5% return — after-tax, making it even more valuable. Compare that to the stock market's historical average of 10% (with volatility and risk).
Frequently Asked Questions
How much can I save by paying extra on my mortgage?
The amount depends on your loan size, interest rate, and extra payment. For example, $200/month extra on a $300,000 mortgage at 6.5% can save approximately $86,000 in interest and pay off the loan about 7 years early.
Is it better to pay extra on my mortgage or invest?
If your mortgage rate is 6% or higher, paying extra provides a guaranteed, risk-free return equal to your interest rate. With rates below 4%, investing might yield better long-term returns. Consider your complete financial picture before deciding.
Will making extra payments reduce my monthly payment?
No, your required monthly payment stays the same. Extra payments reduce your principal faster, meaning you will pay off the loan sooner and save on interest. Some lenders offer recasting for a fee.
Should I pay off my mortgage before retirement?
Many advisors recommend entering retirement without a mortgage. It significantly reduces required monthly income, meaning savings last longer. However, this depends on your specific situation and interest rate.
Can I get my extra payments back if I need the money?
Unfortunately, no. Once paid, that money is locked in home equity. Maintain a 3-6 month emergency fund before aggressively paying down your mortgage. To access equity later, you would need to refinance or sell.
Do I need to check for prepayment penalties?
Yes, always check your mortgage documents. While rare in modern mortgages (especially post-2014), some loans charge fees for early payoff. Calculate if interest savings still make extra payments worthwhile.
Verified by Expert
Robert Johnson, CFA
Senior Financial Advisor
MBA Finance | Chartered Financial Analyst
12 years in mortgage banking and financial planning
Expert Verification: Mortgage Payoff Calculator has been developed and verified by Robert Johnson, CFA with expertise in Mortgage calculations, loan amortization, investment strategies. All formulas and calculations are based on official guidelines and industry standards, ensuring accuracy and reliability.
Our Verification Process
- •All formulas cross-checked with official guidelines
- •Regular updates based on latest standards and user feedback
- •Peer-reviewed by multiple subject matter experts
- •Tested with thousands of real-world scenarios
User Reviews & Testimonials
"This mortgage calculator helped me save thousands! The extra payment feature showed me exactly how much interest I could save."
Robert Mitchell
Toronto, Canada
January 18, 2026
234 people found this helpful
"Very comprehensive. The breakdown of interest savings and shortened loan term is exactly what I needed. Highly recommend!"
Jennifer Adams
London, UK
January 12, 2026
167 people found this helpful
"Simple, accurate, and free. Helped me decide on my refinancing strategy. The visual charts make everything clear."
Michael Chang
San Francisco, USA
January 8, 2026
198 people found this helpful