Mortgage Payoff Calculator

How it works

Your current payment is the level payment that clears your balance at your rate over the payments you have left. To pay off by an earlier target, the calculator finds the level payment that clears the same balance in fewer months; the difference is the extra you need to add each month.

Paying it off sooner saves the interest you would have paid in the later years. Interest saved is the interest on the current schedule minus the interest on the faster one.

Biweekly half-payments mean 26 half-payments a year, which adds up to 13 full monthly payments instead of 12. The calculator models this as paying 13/12 of your payment every month, with interest still charged monthly, and finds how many months that takes.

A one-time lump sum lowers the balance now. Keeping the same monthly payment, the smaller balance is paid off sooner and accrues less interest.

If your loan has a prepayment penalty, choose how it is charged: a percentage of the amount prepaid, or some months of interest on it. For the lump sum the amount prepaid is the lump sum itself. Paying off by the target or biweekly prepays gradually, so for those the penalty shown is the worst case, as if the whole current balance were prepaid at once. The penalty is subtracted from the interest saved to give the net saving.

Formula

i = annual rate ÷ 12
current payment  = paymentForLoan(balance, i, remaining months)
required payment = paymentForLoan(balance, i, target months)
extra each month = required payment − current payment
interest         = payment × months − balance
biweekly months  = periodsToRepay(balance, i, current payment × 13 ÷ 12)
lump-sum months  = periodsToRepay(balance − lump sum, i, current payment)
penalty on amount A = A × % ÷ 100   or   months × A × i
A = lump sum (lump-sum option);  A = balance (target and biweekly: worst case)

Example

A $250,000 balance at 6.5% with 300 payments left has a payment of $1,688.02. To pay it off in 180 months (15 years) the payment must be $2,177.77, an extra $489.75 a month, which saves $114,407.06 in interest.

Biweekly half-payments pay it off in about 249.7 months and save $49,728.71. A one-time $10,000 payment, keeping the same monthly payment, pays it off in about 272.2 months and saves $36,982.84.

Assumptions and limitations

• The rate is fixed, interest is charged monthly at the annual rate ÷ 12, and payments are made at the end of each month. Payoff months can be fractional; the last payment would be smaller than the others.
• The current payment is the one that clears the balance in the remaining months you enter; your actual payment may differ slightly. Escrow for property tax and insurance is not included.
• Biweekly payments are modelled as 13 monthly payments a year spread evenly. Lenders that credit each half-payment when received would save slightly more; some biweekly programs charge fees, which are not included.
• The prepayment penalty is charged once. For the lump sum it is charged on the lump sum; for paying off by the target or biweekly it is a worst case charged on the whole current balance, because those prepay a little at a time. Real penalties often apply only in the first few years or only above a yearly prepayment allowance, so the true figure is usually lower; read your loan documents.
• Money used to prepay the mortgage is not assumed to earn a return elsewhere.
• Results are an estimate for planning, for informational and educational purposes only, and are not financial, tax or legal advice.

Frequently asked questions