Mortgage Extra Payment Calculator

How it is calculated

First the regular payment is found from the standard fixed-rate formula: P = L × i / (1 − (1 + i)−n), with loan L, monthly rate i = annual rate / 100 / 12 and n = years × 12 months (rounded to a whole month). At 0 percent the payment is L / n. Total scheduled interest is P × n − L. The tool then simulates month by month paying P plus the extra amount: each month interest = balance × i, the rest reduces the balance, and the last payment is capped at what is owed. It stops when the balance is below half a cent. Months saved = n minus months actually needed; interest saved = scheduled interest minus simulated interest. The amounts are shown in US dollars. The extra is a fixed monthly add-on; fees, taxes, insurance and rate changes are not modelled.

Common mistakes

• Entering the rate as a decimal, such as 0.06. The field is the annual percentage, so write 6.
• Putting the current monthly payment in the extra box. Extra is only the additional amount on top of the regular payment, which the tool computes itself.
• Entering the remaining term and the original loan amount together. Use the current balance as principal together with the years left, or the savings will be wrong.
• Expecting a result for a negative extra payment. Extra must be 0 or more; at 0 the tool shows 0 months and $0.00 saved.
• Forgetting that a lender may charge prepayment penalties or apply extra money to future instalments instead of principal. The tool assumes all of it reduces principal.