Mortgage Payoff Calculator
Principal & interest only (no taxes/insurance)
Quick Payoff Strategies
- ✓Round up to the nearest $100
- ✓Make biweekly half-payments
- ✓Apply tax refunds to principal
- ✓Put bonuses toward mortgage
Strategies to Pay Off Your Mortgage Early
Why Pay Extra?
Every dollar you pay extra goes directly to reducing your principal balance. This means less interest accrues over the life of the loan, potentially saving you tens of thousands of dollars and years of payments.
Example: $300,000 mortgage at 6.5%
Regular payments: 30 years, $382,633 total interest
Extra $200/month: 22 years, $234,987 total interest
Savings: $147,646 in interest + 8 years of payments!
Extra Payment Strategies
Monthly Extra Payment
Add a fixed amount to each monthly payment. Even $50-$100 extra per month adds up significantly.
Best for: Consistent extra income
Biweekly Payments
Pay half your mortgage every two weeks. This results in 26 half-payments = 13 full payments per year.
Best for: Biweekly paychecks
Annual Lump Sum
Make one large extra payment per year from a bonus, tax refund, or savings.
Best for: Variable income, annual bonuses
Round-Up Method
Round your payment up to the nearest $100 or $500. If your payment is $1,896, pay $2,000.
Best for: Easy to remember and budget
Impact of Extra Payments Over Time
| Extra/Month | Years Saved | Interest Saved |
|---|---|---|
| $100 | 4.5 years | $72,000 |
| $200 | 8 years | $120,000 |
| $500 | 14 years | $190,000 |
| $1,000 | 19 years | $240,000 |
*Based on $300,000 mortgage at 6.5% for 30 years. Your results will vary.
Before Making Extra Payments
Consider these factors first:
- Emergency fund: Have 3-6 months expenses saved first
- High-interest debt: Pay off credit cards before extra mortgage payments
- Retirement contributions: Max out 401(k) match first
- Prepayment penalties: Check if your loan has any restrictions
- Specify "principal only": Ensure extra payments go to principal, not future payments
Important Considerations
- Verify your lender applies extra payments to principal
- Some lenders require written instructions for extra payments
- Consider the opportunity cost of tying up money in home equity
- Tax deductibility of mortgage interest may favor slower payoff
- Consult a financial advisor for personalized advice
Frequently Asked Questions
How much can I save by paying extra on my mortgage?
Extra payments can save substantial amounts. On a $300,000 mortgage at 6.5%, just $200 extra per month saves about $147,000 in interest and pays off the loan 8 years early. Even $100/month extra saves around $72,000 and cuts 4.5 years off your term. The earlier you start, the more you save.
Should I pay off my mortgage early or invest?
Compare your mortgage rate to expected investment returns. If your mortgage is 6.5% and you expect 8% returns, investing may be better mathematically. However, paying off your mortgage provides guaranteed 'return' equal to your interest rate, plus peace of mind. Many people do both - invest in retirement accounts and make some extra mortgage payments.
What is a biweekly mortgage payment?
With biweekly payments, you pay half your monthly amount every two weeks. Since there are 52 weeks in a year, this equals 26 half-payments or 13 full payments - one extra payment per year. This simple strategy can shave 4-6 years off a 30-year mortgage with minimal budget impact.
Do mortgages have prepayment penalties?
Most modern mortgages, especially those issued after 2014 under Qualified Mortgage rules, do not have prepayment penalties. However, some loans (particularly non-QM, jumbo, or older loans) may have them. Check your loan documents or contact your lender before making large extra payments to avoid surprises.