Mortgage Payoff Calculator

How it is calculated

The tool solves the loan formula for time. With balance P, annual rate converted to a monthly rate r = rate ÷ 1200 (the rate is entered as a percent, so 6 means 6%) and fixed monthly payment M: n = −ln(1 − r × P ÷ M) ÷ ln(1 + r) months. Months are rounded up to the next whole payment, and years are n ÷ 12 with one decimal.

It assumes interest compounds monthly on the remaining balance and that you pay the same amount each month. If the payment does not exceed the first month's interest, r × P, the balance never falls and the tool returns no result. The rate must be above zero. Escrow for taxes and insurance should be left out of the payment, since it does not reduce the balance. Rate changes on adjustable loans are not modelled.

Common mistakes

• Entering the rate as a decimal. Type 6 for 6%, not 0.06, otherwise the tool reads it as 0.06% and the payoff looks far too quick.
• Including escrow (property tax and insurance) in the payment. Only principal and interest pay the loan down.
• Using the original loan amount instead of the current balance. The tool counts the time remaining from the balance you enter.
• Using a payment that only just covers interest. At 200000 and 6%, a payment of 1000 returns no result and 1000.01 gives about 192 years.
• Expecting the answer to include extra payments or later rate changes. It assumes the same payment and rate until the balance is zero.