Mortgage Payment Calculator

If you know how much time you have left on your loan

If you know the remaining loan's term length and know the original loan, you can use this calculator. This benefits new or existing loans that have never had outside payments added on.

If You're Unaware of How Much Time Is Left on Your Loan

Calculate the remaining loan term length if you don’t know it. A monthly or quarterly mortgage statement provides the remaining principal balance, interest rate, and monthly payment information.

The Mortgage Payoff Calculator helps determine the various possibilities for paying off the mortgage: one-time or additional monthly payments, biweekly repayments, or paying it off altogether. Interest savings, remaining payment duration, and payout times are compared across different payoff options.

A mortgage's principal and interest

Borrowed money is the "principal," whereas interest is the fee the lender charges to borrow the same amount. The principal and interest are the two portions of the typical loan repayment. A part of the outstanding principal is usually charged as interest. Interest and principal are typically included in a home loan amortization plan.

You will pay the interest first, and the balance of the payment will go toward the principal. Initially, you will spend a more significant portion of your interest expense because the interest rate on all of your debt is higher. As a result, the interest paid decreases while the amount of principal paid increases with each subsequent payment. With a reduction in the amount of money owed, the cost of borrowing will go down.

The mortgage repayment calculator and accompanying amortization table demonstrate this. After entering the data, the Mortgage Payoff Calculator will compute the relevant information.

Besides selling the house to pay off the mortgage, some borrowers may want to pay off their mortgage early to avoid further interest. Paying off the mortgage early may be done by following a few simple steps.

Additional Payments

An additional payment refers to any sum paid on top of the regular monthly mortgage installment. Borrowers may choose to make these extra contributions sporadically or on a regular schedule, like monthly or annually, according to their financial capability and goals.

Paying more than the required amount toward your mortgage can lead to significant interest savings over the loan's lifetime. Let’s consider a more realistic example:

Suppose you have a $200,000 30-year fixed mortgage with a 5% interest rate. Your monthly payment for principal and interest is approximately $1,073.64. If you pay an extra $100 per month, you would save about $37,303 in interest over the life of the loan and pay off the loan approximately 6 years and 4 months earlier.

Similarly, if you made a one-time additional payment of $5,000 towards the principal after five years of payments, you would save about $14,000 in interest and pay off the loan about 18 months earlier.

These numbers are generalized estimates and the actual savings can vary based on the specific terms of your loan and the timing of the extra payments. Mortgage calculators can provide precise savings figures and how additional payments affect the amortization schedule of your loan.

Biweekly Payments

Biweekly payments offer an alternative strategy to accelerate mortgage payoff. This approach involves making half of the regular mortgage payment every two weeks. Because there are 52 weeks in a year, this results in 26 half-payments, which is equivalent to 13 full payments by the end of the year—thus, effectively making one extra month's payment annually. This method aligns well with borrowers who receive their paychecks on a biweekly basis, as it allows them to consistently allocate a portion of each paycheck towards their mortgage, potentially shortening the loan term and reducing the amount of interest paid over the life of the loan.

Make a shorter-term refinance

Refinancing, or getting a new mortgage to pay off an existing one, is another choice. A borrower has a $200,000 mortgage for 20 years at 5% interest. Refinancing to a new 20-year loan with the same principle and a 4% interest rate will reduce the monthly payment from $1,319.91 to $1,211.96, saving the borrower $107.95. A total of $25,908.20 in interest savings will be realized throughout the loan.

Borrowers may opt for shorter or longer-term refinances. Interest rates for shorter-term loans are often cheaper. Closing expenses and fees are required when refinancing. Refinancing should only be considered if it is financially favorable to the borrower. Visit our Refinance Calculator to see what your refinancing options are.

Prepayment Penalties

The lender may impose a prepayment penalty if the loan is paid off early. According to lenders, mortgages are assets that provide long-term cash flow, and lenders do not want to see them hurt.

Lenders employ a variety of methodologies to compute prepayment penalties. Fines of up to 80% of the interest the lender expects to receive over the next six months are one option for penalties. A lender may charge a percentage of the sum. These penalties can add up quickly in the early phases of a mortgage.

Prepayment fines are becoming less frequent. They are typically voided after a set term, such as the fifth year of a mortgage contract if they are included. Borrowers need to study the fine print or ask their lender for clarification on prepayment penalties before signing on the dotted line. Prepayment penalties are not allowed on loans guaranteed by the Federal Housing Administration (FHA), the Veterans Administration (VA), or credit unions.

Opportunity Costs

People who have the desire to pay off their mortgage early should consider what they might have missed out on if they hadn’t. There is a financial opportunity cost for every dollar invested in a specified goal.

Mortgage prepayments are often viewed as a low-risk, low-reward investment because of the low-interest rate on the house mortgage. Credit card debt and minor debts, like school loans and automobile loans, should be paid off first before making extra payments on a mortgage.

Mortgage interest isn’t the only source of income that may outpace other assets. Although you may compare some of these alternative investments to saving money by paying off a mortgage, some alternative investments may be better than others.

An individual’s present mortgage at a 4 percent interest rate would be less costly in the long term than investing a certain amount of money in a portfolio of stocks earning 10% a year. Mortgage holders may choose to investigate corporate bonds, actual gold, and a variety of other assets instead of making further payments.

In addition to making extra mortgage payments, open tax-advantaged accounts if you wish to invest for the future. The good options are an IRA, a Roth IRA, or an Employee Retirement Income Security Act (ERISA) account. They will save a substantial amount of money in taxes and, as a result, their profits will increase.

Examples

It is up to each person to decide whether increasing their monthly mortgage payments is financially viable.

Example 1

Steve has no other debts outside of the mortgage on the family home. No more student debts, vehicle loans, or credit card loans exist. He cannot choose between making further mortgage payments or investing in the stock market for his discretionary money. In the long run, the market has outperformed his mortgage’s 4% interest rate.

His financial counselor made an important point: Steve’s employer has recently begun making layoffs. His management even cautioned Steve that he might be the next person fired. Steve can put extra money into his emergency fund.

Investing in the stock market or making more mortgage payments is not a good idea in this circumstance.

Example 2

Anna craved the enjoyment that comes with owning a beautiful house. Even though there were no penalties for paying her mortgage early, she opted to augment it with additional installments to have it paid off more quickly.

Anna once went out to lunch with a financial planner friend. Her buddy advised her to pay off her three high-interest credit card debts to save money in the long run. The mortgage only charged a 5% interest rate on some credit cards. These payments consumed a significant portion of her salary. Prioritizing her high-interest loan repayments will help Anna save money eventually.

Example 3

Besides the mortgage on his home, Chris has no additional debt. He has a six-month emergency fund with a steady job, and he’s saved up some extra money for the future. Chris has a few years left before he can call it a day.

Chris’ financial counselor suggests he pay off his mortgage early to save money on interest. As a result, he’s wary about taking on more substantial risks, like buying individual shares of stock. He needs to start on the right foot for retirement.