How This Mortgage Payoff Calculator Works
Each month, interest is charged on the remaining balance (balance × annual rate ÷ 12) and your payment covers that interest first; the rest reduces the balance. An extra payment goes entirely to the balance, which shrinks every future month's interest charge. The calculator simulates month by month, once with your current payment and once with the extra amount added, and reports both payoff times and both interest totals.
Monthly interest = balance × rate ÷ 12 · New balance = balance + interest − paymentRepeated monthly until the balance reaches zero. Extra payments reduce the balance directly, so every later month's interest is smaller.
Worked example: $300,000 balance at 6.5%, payment $1,896.20 a month. Without extra payments: payoff in 361 months, total interest $382,636.53. With an extra $200 a month ($2,096.20 total): payoff in 277 months, total interest $279,186.15. The extra $200 saves $103,450.38 of interest and 84 months — 7 years — of payments.
Practical tips
Extra principal in year one saves interest in every remaining year. The same $200 added in year 25 of a 30-year loan saves far less.
Most modern US mortgages have none, but confirm yours allows extra principal payments and that they are applied to principal, not held as advance payments.
Extra mortgage principal at 6.5% is a guaranteed 6.5% return. Paying a 22% credit card first, or keeping an emergency fund, usually beats it.
Paying half your monthly payment every two weeks (26 half-payments = 13 full payments a year) has roughly the same effect as the extra monthly amount shown here.