1. What is the Early Repayment Formula?

The early repayment formula calculates how many months it will take to pay off a home loan when making extra payments. It accounts for the principal amount, monthly payment, and interest rate to determine the accelerated payoff timeline.

2. How Does the Calculator Work?

The calculator uses the early repayment formula:

Where:

• \( n \) — Number of months until payoff
• \( PMT \) — Monthly payment amount (USD)
• \( P \) — Principal loan amount (USD)
• \( r \) — Monthly interest rate (decimal)

Explanation: The formula calculates how many months are needed to pay off the loan by considering how each payment reduces both interest and principal.

3. Importance of Early Repayment Calculation

Details: Calculating early repayment helps borrowers understand how extra payments can significantly reduce loan term and total interest paid, allowing for better financial planning.

4. Using the Calculator

Tips: Enter your regular monthly payment, original loan amount, and annual interest rate. The calculator will show how many months early you can pay off your loan.

5. Frequently Asked Questions (FAQ)

Q1: How accurate is this calculation?
A: This provides an estimate assuming fixed payments and interest rate. Actual results may vary slightly due to rounding in amortization schedules.

Q2: What if I make irregular extra payments?
A: This calculator assumes consistent extra payments. For irregular payments, you'd need a more detailed amortization calculator.

Q3: Does this account for changing interest rates?
A: No, it assumes a fixed interest rate throughout the loan term.

Q4: How much can I save with early repayment?
A: Early repayment can save thousands in interest, especially in the early years of a loan when more payment goes toward interest.

Q5: Are there prepayment penalties?
A: Some loans have prepayment penalties. Check your loan terms before making extra payments.