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Loan Payoff Calculation:
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The Home Loan Early Payment Calculator determines how much time and money you can save by making additional principal payments on your mortgage. It shows the impact of extra payments on your loan term and total interest paid.
The calculator uses an iterative approach to solve:
Where:
Explanation: The calculator recalculates the loan balance each month, applying your regular payment plus any extra amount to principal until the balance reaches zero.
Details: Making extra principal payments can significantly reduce the total interest paid and shorten the loan term, potentially saving tens of thousands of dollars over the life of the loan.
Tips: Enter your loan principal, interest rate, and term. Then input any additional monthly payment you plan to make. The calculator will show your new payoff date and interest savings.
Q1: How much should I pay extra each month?
A: Even small amounts ($50-$100) can make a big difference. Paying one extra payment per year can shorten a 30-year mortgage by several years.
Q2: When is the best time to make extra payments?
A: The earlier you start, the more you'll save. Extra payments in the first years have the greatest impact as more of your payment goes toward interest initially.
Q3: Should I pay extra or invest instead?
A: This depends on your interest rate vs. expected investment returns. Paying off debt gives a guaranteed return equal to your interest rate.
Q4: Are there prepayment penalties?
A: Most modern mortgages don't have prepayment penalties, but check your loan documents to be sure.
Q5: How do I ensure extra goes to principal?
A: Contact your lender about their process - you may need to specify "for principal reduction" with each payment.