How Much Could Home Loan Prepayments Save You?
See how an extra monthly payment could change your home loan payoff time and reduce the amount of interest you pay.
Try the numbers yourself
Assumptions used: The loan is modeled on a monthly reducing balance. The extra amount is treated as a recurring monthly prepayment applied toward principal. Lender-specific prepayment rules, rate resets, fees and charges are not included.
Estimated interest saved
Amounts are rounded to the nearest whole currency unit.
Regular monthly principal & interest payment: —
Payoff without extra payments: —
Payoff with extra payments: —
Time saved: —
Interest without extra payments: —
Interest with extra payments: —
Total paid with extra-payment plan: —
A simple example
Suppose you have a $300,000 home loan balance, a 6.5% interest rate, and 30 years remaining. The regular principal-and-interest payment is about $1,896 per month.
If you add $500 per month, the calculator estimates that the loan could be paid off about 12 years and 6 months earlier, while reducing total interest by roughly $180,000.
How additional home loan prepayments work
Mortgage interest is calculated on the remaining loan balance. When you pay extra toward principal, the balance falls faster. A smaller balance means less interest is charged in future months.
Over a long mortgage term, even a relatively modest recurring extra payment can reduce both the payoff period and total interest cost.
What this calculator assumes
The calculator assumes a fixed interest rate and monthly payments. It models principal and interest only. It does not include property taxes, homeowners insurance, mortgage insurance, society or maintenance charges, escrow changes, lender fees, or prepayment penalties.
Extra payments are assumed to be applied directly to principal each month. Your lender's actual payment-processing rules may differ.
The practical takeaway
Try several extra-payment amounts, such as $100, $250, or $500 per month. Comparing the results can help illustrate the tradeoff between keeping cash available today and reducing mortgage interest over time.
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How this estimate works
This calculator uses a standard monthly reducing-balance amortization model and treats the additional amount as a monthly prepayment. Actual lender calculations can differ because of payment dates, interest-rate changes, lender rules, charges or other loan terms. Check your loan statement and lender terms before making an actual prepayment decision.