Mortgage Payoff Calculator
Check Your Terms
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Making regular overpayments on your mortgage can have a huge impact, letting you pay off your loan years earlier and saving you thousands in interest. This calculator shows you the powerful effect of paying a little extra.
How It Works
When you make an overpayment, the extra money goes directly towards reducing your loan's principal balance. This means that from the very next month, the interest you're charged (which is calculated on the remaining balance) will be slightly lower.
The Snowball Effect
Over time, this effect snowballs. Because you're paying less interest each month, a larger portion of your standard payment also goes towards the principal. This accelerates your debt reduction, shaving years off your mortgage term.
Check With Your Lender
Before making overpayments, always check with your mortgage lender. Most allow you to overpay by up to 10% of the outstanding balance each year without penalty, but it's crucial to confirm their specific terms.
Logic & Formulas
This calculator compares two scenarios: paying off the mortgage normally, and paying it off with overpayments.
- Calculate Original Monthly Payment: First, it determines the standard monthly payment for the original loan amount and term using the amortization formula (see Mortgage Calculator).
- Calculate New Monthly Payment: It adds the overpayment amount to the original monthly payment.
New Payment = Original Payment + Overpayment
- Simulate Both Payoffs: The calculator then simulates the payoff for both scenarios month-by-month (see Debt Payoff Calculator for the iterative logic). It tracks the total months and total interest paid for each.
- Compare Results: Finally, it calculates the difference in time (months) and total interest paid between the original and overpayment scenarios to show you the time and money saved.