# What does mortgage payoff save?

Computes how much sooner extra monthly, yearly, or lump-sum payments pay off a fixed-rate mortgage, and the interest they save, from the original loan and the payments already made.

- Page: https://www.acalculator.org/finance/mortgage-payoff-calculator
- JSON spec: https://www.acalculator.org/finance/mortgage-payoff-calculator.json
- Version: 5e575c292185

## Default answer

Example with the default inputs (Original loan amount $300,000.00, Interest rate 6.5%, Original term (years) 30, Payments made so far 60, Extra each month $200.00, Extra each year $0.00, Lump sum now $0.00, Next payment month September 29, 2026) on the example date Tuesday, September 29, 2026: Paying extra on this $300,000.00 mortgage pays it off 5 years sooner and saves $66,943.94 of interest.

## Inputs

| Key | Label | Description |
| --- | --- | --- |
| amount | Original loan amount | The amount you borrowed when the mortgage started. |
| rate | Interest rate | The mortgage’s fixed yearly rate. The monthly rate is this divided by 12. |
| years | Original term (years) | The length of the mortgage when it started, for example 30 or 15. |
| paid | Payments made so far | How many monthly payments you have made (12 a year). |
| extra | Extra each month | An extra amount paid with every payment from now on. |
| yearly | Extra each year | An extra amount paid once a year, with every 12th payment from now. |
| lump | Lump sum now | A one-time extra amount paid with the next payment. |
| start | Next payment month | The month of your next payment. It dates the schedule and the payoff month. |

## Outputs

| Key | Label | Description |
| --- | --- | --- |
| sooner | Paid off sooner by | How much sooner the extra payments pay off the mortgage, in years and months. |
| saved | Interest saved | The interest the extra payments save over the rest of the loan. |
| balanceNow | Balance today | The balance on the original schedule after the payments made so far. |
| payment | Monthly payment | The original principal and interest payment. |
| monthsLeft | Payments left with extra | How many payments are left with the extra payments. |
| originalLeft | Payments left without extra | How many payments are left on the original schedule. |
| interest | Interest left with extra | The interest you will still pay, with the extra payments. |
| interestBefore | Interest left without extra | The interest you would still pay on the original schedule. |
| payoff | New payoff month | The month of the last payment with the extra payments. |

## Method

payment P = A × r ÷ (1 − (1 + r)^−N); balance today B = A(1 + r)^k − P((1 + r)^k − 1) ÷ r after k payments; from today, each month interest = balance × r and P plus any extra, minus the interest, lowers the balance.

## Assumptions

- The rate is fixed and every payment so far was made on time, so the balance today is the scheduled balance.
- Interest is charged monthly at the rate ÷ 12; the extra goes straight to the balance.
- The yearly extra is paid with payments 12, 24, 36, … from now; the lump sum with the next payment.
- Taxes, insurance, and mortgage insurance are not included.
- Values are not rounded to the cent between months; only the display is rounded.

## Worked examples

1. amount = $300,000.00, rate = 6.5%, years = 30, paid = 60, extra = $200.00 gives payment = $1,896.20, balanceNow = $280,832.93, monthsLeft = 240, sooner = {"years":5,"months":0}, saved = $66,943.94. Source: hand calculation in content.mdx; Python 3 in docs/progress/WP-31/python/mortgage_payoff.py.
2. amount = $120,000.00, rate = 0%, years = 20, paid = 120, extra = $0.00, lump = $10,000.00, start = 2026-11-01 gives balanceNow = $60,000.00, monthsLeft = 100, sooner = {"years":1,"months":8}, saved = $0.00, payoff = 2035-02-01. Source: hand calculation in content.mdx: at 0% the balance is 120,000 − 120 × 500.
3. amount = $200,000.00, rate = 5%, years = 15, paid = 24, extra = $0.00, yearly = $2,000.00, lump = $5,000.00 gives originalLeft = 156, monthsLeft = 132, saved = $12,114.65, interest = $53,458.42. Source: month by month in Python (docs/progress/WP-31/python/mortgage_payoff.py), rule in content.mdx.

## FAQ

### How much sooner will extra payments pay off my mortgage?

Each extra dollar goes straight to principal, so every later month charges less interest and more of the regular payment lowers the balance. On a $300,000 mortgage at 6.5% over 30 years, five years in, paying $200 more a month ends it 5 years sooner and saves $66,943.94 of interest.

### Do I need my current balance?

No. Enter the original loan, rate, term, and the number of payments you have made; the page works out the scheduled balance. If you have paid extra before, your real balance is lower than that, and the payoff will come sooner still.

### Is a lump sum or a monthly extra better?

Money paid earlier saves more interest, because it stops interest from building on it for longer. A lump sum now saves more than the same total spread over later months. The best choice depends on your cash and other goals.

### Should I pay off my mortgage early or invest?

Paying extra earns, in effect, your mortgage rate with no risk. Investing may earn more or less. Many people first build an emergency fund, pay off higher-rate debt, and take any employer retirement match before paying extra on a mortgage.

### Will my lender charge a penalty for paying early?

Some mortgages have a prepayment penalty, usually for paying off the whole loan within the first few years. The CFPB notes it does not normally apply to paying extra principal in small amounts. Check your loan papers.

### Does paying extra lower my monthly payment?

No. The payment stays the same and the loan ends sooner. To lower the payment after a large lump sum, ask your lender about a recast (see the mortgage recast calculator).

## Sources

- Consumer Financial Protection Bureau, How does paying down a mortgage work? https://www.consumerfinance.gov/ask-cfpb/how-does-paying-down-a-mortgage-work-en-1943/
- Consumer Financial Protection Bureau, What is a prepayment penalty? https://www.consumerfinance.gov/ask-cfpb/what-is-a-prepayment-penalty-en-1957/
- Outstanding balance by the prospective and retrospective methods: S. A. Broverman, Mathematics of Investment and Credit, chapter 3.