Mortgage Payoff Calculator: How Much Should Your Extra Payments Be?
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If you have extra cash, paying off your mortgage early can save you tens — or even hundreds — of thousands of dollars over the life of the loan.
One way to do that is by making larger monthly payments. But how much more should you pay? NerdWallet's early mortgage payoff calculator can help you figure it out.
The mortgage payoff calculator shows you:
How much more principal you would have to pay every month to pay off the loan in a certain number of years.
How much interest you would save by paying off the loan early.
To fill out the fields, it’s helpful to have one of the following on hand:
A recent monthly mortgage statement.
The first page of your Closing Disclosure (the document you received when you finalized your mortgage).
Mortgage payoff calculator help
Mortgage amount: You can find this on the first line of the Loan Terms section of your Closing Disclosure.
How many years from now do you want to have your mortgage paid off? Try entering different numbers to see how your payoff timeline changes the total interest you'll pay.
How much do you still owe (your outstanding balance)? Look for this figure in a recent monthly statement, or contact the mortgage servicer. Or you can use NerdWallet's mortgage amortization calculator and drag the slider to estimate how much you still owe.
Results: Dollar amounts show only the principal and interest portions of your monthly payments. Your full monthly payment may also include other costs such as taxes, homeowners insurance and mortgage insurance (if applicable).
For more information about how the process of gradually paying off a mortgage works, see this explanation of mortgage amortization.
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How do you decide whether to make extra loan payments?
Pay off a mortgage early by refinancing
If you can refinance with a lower interest rate, for a shorter term, it's a win-win. For example, you could refinance a 30-year mortgage into a 15-year loan. The monthly payments will almost certainly be higher, and you'll pay closing costs, but your overall interest expense will be dramatically lower. See NerdWallet’s list of best mortgage refinance lenders.
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on New American Funding
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on GO Mortgage
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Pay off a mortgage early by paying more
Paying off a mortgage early requires you to make extra payments, but there's more than one way to approach it.
Here are some specific ideas:
Use the 1/12 rule. Divide your monthly principal payment by 12, then add that amount to each monthly payment. You end up making the equivalent of 13 payments, instead of the required 12 payments, every year.
Use a savings account. Deposit one-twelfth of the monthly principal payment into a savings account each month, then use that money to make a 13th payment.
Make biweekly payments. Pay half a mortgage payment every two weeks. You make 26 half-payments, equivalent to 13 full payments a year. If you want to try this, first make sure your mortgage servicer is set up to receive biweekly payments.
Make a lump-sum payment toward the principal. Put extra money—like a tax refund, work bonus, or inheritance—directly toward your loan’s principal. Even a single lump-sum payment can reduce your interest and shorten your loan term.
What to know before paying off your mortgage early
Before you make an extra payment, ask your mortgage servicer for instructions. You might have to specify that the extra payment should go toward paying down the principal balance, not toward interest or future payments. Each servicer has its own process.
You’ll also want to check the terms of your loan to see if there’s a prepayment penalty. This fee usually only applies if you pay off your loan within the first three to five years.