Mortgage Payoff Calculator
See how many years sooner you can pay off your mortgage and how much interest you save by adding a fixed extra amount to every monthly payment.
Time saved by overpaying
6.5 years
- Original monthly payment (P&I)
- £1,350.41
- New monthly payment
- £1,550.41
- Loan paid off in
- 18.5 years
- Interest paid — without overpayment
- £205,124.30
- Interest paid — with overpayment
- £144,341.18
- Total interest saved
- £60,783.11
Adding a fixed extra amount to every monthly mortgage payment goes straight to principal, shrinking the balance faster than the amortisation schedule expects. The remaining balance accrues less interest in every future month, so the loan ends years earlier and you pay tens of thousands less in interest over the life of the mortgage.
How to use this calculator
Enter your current outstanding mortgage balance, your current annual interest rate (APR), the number of years remaining on the loan, and the extra amount you plan to add to every monthly payment on top of your normal principal and interest. The calculator returns the time you would shave off the mortgage, the new payoff term in years, and the total interest you would save over the life of the loan compared with sticking to the original schedule.
How the calculation works
The standard monthly payment that fully amortises a balance L at monthly rate r over n months is M = L × r / (1 − (1+r)^−n). If you instead pay M + X every month, the loan is retired in k = −log(1 − L·r / (M+X)) / log(1+r) months. The interest cost of each schedule is simply the monthly payment times the number of payments, minus the original balance. Because every extra dollar paid goes directly to principal, all future months accrue less interest — that compounds, which is why small overpayments cut years off the mortgage.
Worked example
You owe 200,000 at 6.5% APR with 25 years remaining. Your scheduled principal and interest is about 1,350 per month and you would pay roughly 205,100 in interest over the remaining term. Adding 200 to every payment (1,550 total) repays the loan in about 18 years 6 months instead of 25 — saving roughly 6.5 years and about 61,000 in interest. The earlier in the loan you start, the bigger the saving, because each extra payment removes more future interest.
Frequently asked questions
Will my lender accept extra principal payments?
Most modern mortgages — both US conforming loans and UK residential mortgages — allow unlimited overpayments to principal. In the US, federal law (Truth in Lending Act) prevents prepayment penalties on most owner-occupied home loans originated after January 2014. In the UK, FCA rules require any early repayment charge (ERC) to be disclosed up front; many lenders permit overpayments of up to 10% of the balance per year with no ERC. Always check your mortgage offer or call your lender before automating extra payments — and tell them in writing that the extra is to be applied to principal, not held as a forward credit.
How does an extra monthly payment save so much interest?
Interest on a mortgage is charged each month on the outstanding balance. Your scheduled payment is sized so that, over the full term, each month pays the interest due plus a slice of principal. An extra payment is pure principal — so the balance the next month is lower, and every future month from then on accrues less interest. Because that effect compounds for the entire remaining term, even modest overpayments early in the loan remove tens of thousands of pounds or dollars of interest that would otherwise be charged.
Is it better to pay extra each month, or one large lump sum?
In pure mathematical terms, money applied to principal earlier saves more interest, so a lump sum paid today beats the same total spread across the year. In practice, a recurring extra monthly payment is easier to budget for and acts as a forced savings plan. Many borrowers do both: route a fixed extra each month, and add bonuses or tax refunds as one-off lump sums. This calculator handles the recurring-extra case; for a single lump sum, treat it as a balance reduction and rerun with the lower starting balance.
Should I overpay the mortgage or invest the money instead?
Overpaying the mortgage gives you a guaranteed, tax-free return equal to your mortgage interest rate — currently mid-single-digits in most markets. Investing in a diversified index fund has historically averaged a higher return but with real downside risk and no guarantee. A common framework: clear high-interest unsecured debt first, build an emergency fund of 3–6 months of expenses, capture any employer pension or 401(k) match, then choose between overpaying and investing based on your interest rate, tax situation, and risk appetite. This is a personal-finance decision, not a calculator output — when in doubt, talk to an independent adviser.
Does overpaying lower my monthly payment or just shorten the term?
By default, an unscheduled extra principal payment shortens the term without changing the contractual monthly payment — the schedule is "paid ahead" and the loan ends earlier. If you want a lower monthly payment instead, ask your lender about a "recast" (US) or "term reduction" (UK) — the lender re-amortises the loan over the original term using the new lower balance, producing a lower required payment. Recasts often carry a small fee (typically 250–500 USD in the US) but no new underwriting; not all loan types are eligible.
Is there a downside to paying off my mortgage early?
Possibly. Money that goes into the mortgage is hard to get back out without selling or refinancing — it is illiquid. You lose the small tax advantage of mortgage interest deduction if you itemise (US) or any specific tax relief that applies in your country. And if your mortgage rate is low relative to safe alternative returns (e.g. a high-yield savings account or government bonds), the maths can favour holding cash instead. Run the numbers both ways and consider your job security, emergency fund, and other goals before committing.