Accelerated Mortgage Payoff Calculator

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For many people, your home is the most significant and expensive piece of debt you may have to pay for decades. What’s great, though, is that if your financial situation changes and you have more funds to allocate to your housing costs, an early mortgage payoff can save you thousands on your interest costs. If you’re considering making extra payments or an early payoff, our mortgage payoff calculator can help you determine exactly how much you stand to save based on different payment schedules.


Information and interactive calculators are made available to you as self-help tools for your independent use and are not intended to provide investment advice. We cannot and do not guarantee their applicability or accuracy in regards to your individual circumstances. All examples are hypothetical and are for illustrative purposes. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.

How to save on interest by paying off your home loan early

When you take out a mortgage to buy a home, you are agreeing to pay back the loan plus a little extra to the lender as the cost of getting early access to the funds. This extra money comes in the form of interest, which is calculated as a percentage of the total money borrowed.

As you pay off your loan, some of the money from each payment goes to pay the interest costs, and some of the money goes to pay the principal (the actual money you borrowed). In the early years of most home loans, the majority of the money goes towards interest, and as the loan progresses, it slowly shifts more towards the principal.

By paying off your loan early, you can free up a lot of extra money for other purchases. Just how much interest are you paying on a mortgage loan that you could free up? If you purchased a $400,000 home, made an $80,000 down payment, and receive an interest rate of 4% fixed for 30 years, the total amount you would pay over the life of the loan is $549,982.80. That’s $229,982.80 in total interest paid.

  • Extra payments to principal – One of the easiest ways to chip away at your mortgage loan is to make additional payments. You can make these regularly or sporadically as you have extra funds to contribute. Do make sure you let the lender know you want these extra payments to go 100% towards the principal of your loan.
  • Larger payments – Instead of making extra payments, you can always make larger regular payments to work towards an early mortgage payoff. Make sure, though, that you instruct the lender to allocate the extra funds to the principal only.
  • Lump-sum payoff – If you’ve come into a more substantial sum of money and are ready to get the maximum interest savings, you can make a lump-sum payment to pay off your home completely. The mortgage payoff calculator here can help you to see exactly how much money this will save you.

The bottom line

When it comes to saving money on your home, working towards an early mortgage payoff is one of the best ways to cash in. Additionally, you can always look into refinancing in concert with initial payments or as an alternative to maximizing your savings. The mortgage payoff calculator can help you see how much you can save from small or large adjustments to your current payment schedule. You may be surprised to see how much money you can save over the life of the loan by making small adjustments to your payment size and frequency.

Jason Lee

Jason Lee is a U.S.-based freelance writer with a passion for writing about dating, banking, tech, personal growth, food and personal finance. As a business owner, relationship strategist, and officer in the U.S. military, Jason enjoys sharing his unique knowledge base and skillsets with the rest of the world.