PayoffTable

Mortgage Payoff Calculator

Most calculators assume your extra payment repeats every month, forever. Real life is lumpy — a tax refund here, a bonus there. This one models both: a steady monthly extra plus a lump sum every twelve months.

Reviewed by the PayoffTable editorial team · Updated 2026-10-24

Your numbers

From your latest statement
Your current rate
From your statement or payoff quote
Principal only, on top of your regular payment
e.g. tax refund or bonus — applied every 12 months

Runs entirely in your browser. Nothing is uploaded.

The single most common complaint about mortgage calculators, straight from borrower forums: "most calculators only allow a set additional payment assumed monthly." People do not prepay in a flat line. They send an extra $200 most months, then drop $3,000 from a tax refund, then skip two months when the car needs tires.

This calculator handles the two shapes that matter. The monthly extra is the habit — the autopay you set and forget. The yearly lump sum is the windfall — applied every twelve months from your chosen start date, which models the tax-refund cycle that drives most real prepayment. Run both together and the schedule shows the balance falling in visible steps.

The comparison is the point: your servicer's timeline versus yours. The gap between the two payoff dates is measured in years, and the interest-saved number is money that never leaves your account again.

How the payoff calculation works

The calculator first reproduces your servicer's baseline: current balance, current rate, remaining term, no extras. That baseline is what you agreed to — it is the yardstick. Then it re-runs the identical month-by-month simulation with your extra payment applied after each scheduled payment, and your lump sum applied once per year.

Each month the engine does, in order: charge interest on the pre-payment balance; apply your regular payment (interest first, remainder to principal); apply the monthly extra; if this is a lump-sum month, apply the lump. The balance that carries into next month is smaller, so next month's interest is smaller. Extra payments compound in your favor.

interest_m = balance_m × r balance_m+1 = balance_m − (payment − interest_m) − extra_m − lump_m

The simulation runs month by month until the balance hits zero. Your new payoff date is the month that happens; "months sooner" and "interest saved" are the differences against the no-extra baseline. There is no closed-form shortcut here — irregular payments are exactly why a month-by-month simulation is the honest tool.

Worked example. Balance $320,000 at 6.5% with 25 years remaining. Baseline: payoff in Oct 2051, total interest $328,198.87. Add $200/month + $3,000 every 12 months: payoff in Oct 2043 — 96 months sooner, $118,486.70 interest saved. The lump sums alone contribute $78,181.55 of that — about 66%.

Terms & definitions

Amortization
The process of paying off a loan with scheduled payments that cover both interest and principal. Early payments are mostly interest; later payments are mostly principal.
Principal
The amount you borrowed and still owe. Extra payments reduce principal directly, which shrinks every future interest charge.
APR
Annual Percentage Rate — the yearly cost of the loan including fees. Your monthly interest charge uses the note rate, which is usually a touch lower.
Term
The number of years the loan is scheduled to last. A 30-year term has lower payments but roughly double the total interest of a 15-year term at the same rate.

Frequently asked questions

Should I tell my servicer the extra payment is for principal?
Yes. Almost every servicer defaults extra money to "future payments" (which just prepays interest you'll owe anyway) unless you label it principal-only. Online portals have a separate field; if you pay by check, write "apply to principal" on it. Confirm on your next statement that the balance dropped by the full extra amount.
Are there prepayment penalties on mortgages?
On most modern loans, no — prepayment penalties were effectively banned for qualified mortgages and are rare on conventional and FHA loans originated after 2014. Some non-qualified or portfolio loans still carry them, usually in the first 3–5 years. Check your note's prepayment clause; if none is listed, extra payments are free.
Is paying off early better than investing the difference?
It depends on the after-tax spread between your mortgage rate and your expected investment return, plus risk tolerance and liquidity. Paying off a 6.5% loan is a guaranteed 6.5% return; investing hopes to beat it but is not guaranteed. Our guide on the tradeoff walks through the decision with numbers.
Why does the lump sum help so much when it's applied only once a year?
Timing matters less than consistency, but each lump sum lands on a balance that is permanently smaller than it would have been — and the interest you skip compounds every month afterward. A $3,000 lump in month 12 saves interest in all 200+ remaining months.

References

  1. CFPB — Can I prepay my mortgage without penalty?
  2. CFPB — What is an amortization schedule?
  3. Federal Reserve — Mortgage origination resources (APR vs note rate)
Educational content only — not financial, tax, or legal advice. Your loan terms govern; confirm details with your servicer.

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