Save Thousands in Interest Expenses by Paying Your Loan Off Early With Additional Payments
This calculator allows you to enter an initial lump-sum extra payment along with extra monthly payments which coincide with your regular monthly payments. We also offer three other options you can consider for other additional payment scenarios.
Want to Make Irregular Payments? Do You Need More Advanced Calculation Options?
- Biweekly Payment Method: Please see our bi-weekly mortgage calculator if you are using biweekly payments to make an effective 13th monthly payment.
- Extra Payments In The Middle of The Loan Term: If you start making extra payments in the middle of your loan then enter the current loan balance when you started making extra payments and set the loan term for however long you have left in the loan. For example, if you are 3.5 years into a 30-year home loan, you would set the loan term to 26.5 years and you would set the loan balance to whatever amount is shown on your statement. If you do not have a statement to see the current balance you can calculate the current balance so long as you know when the loan began, how much the loan was for & your rate of interest.
- Irregular Extra Payments: If you want to make irregular extra contributions or contributions which have a different periodicity than your regular payments try our advanced additional mortgage payments calculator which allows you to make multiple concurrent extra payments with varying frequencies along with other lump sum extra payments.
For your convenience current Los Angeles mortgage rates are published underneath the calculator to help you make accurate calculations reflecting current market conditions.
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By default 30-yr fixed-rate loans are displayed in the table below. Filters enable you to change the loan amount, duration, or loan type.
Exercising Additional Payment Options
When you sign on for a 30-year mortgage, you know you're in it for the long haul. You might not even think about trying to pay off your mortgage early. After all, what's the point? Unless you're doubling up on your payments every month, you aren't going to make a significant impact on your bottom line — right? You'll still be paying off your loan for decades — right?
Not necessarily. Even making small extra payments over time can shave years off your loan and save you thousands of dollars in interest, depending on the terms of your loan.
Early Loan Repayment: A Little Goes a Long Way
One of the most common ways that people pay extra toward their mortgages is to make bi-weekly mortgage payments. Payments are made every two weeks, not just twice a month, which results in an extra mortgage payment each year. There are 26 bi-weekly periods in the year, but making only two payments a month would result in 24 payments.
Instead of paying twice a week, you can achieve the same results by adding 1/12th of your mortgage payment to your monthly payment. Over the course of the year, you will have paid the additional month. Doing so can shave four to eight years off the life of your loan, as well as tens of thousands of dollars in interest.
However, you don't have to pay that much to make an impact. Even paying $20 or $50 extra each month can help you to pay down your mortgage faster.
Calculating Your Potential Savings
If you have a 30-year $250,000 mortgage with a 5 percent interest rate, you will pay $1,342.05 each month in principal and interest alone. You will pay $233,133.89 in interest over the course of the loan. If you pay an additional $50 per month, you will save $21,298.29 in interest over the life of the loan and pay off your loan two years and four months sooner than you would have.
You can also make one-time payments toward your principal with your yearly bonus from work, tax refunds, investment dividends or insurance payments. Any extra payment you make to your principal can help you reduce your interest payments and shorten the life of your loan.
Considerations for Extra Payments
Pay Off Higher Interest Debts First
Paying off your mortgage early isn't always a no-brainer. Though it can help many people save thousands of dollars, it's not always the best way for most people to improve their finances.
Compare your potential savings to your other debts. For example, if you have credit card debt at 15 percent, it makes more sense to pay it off before putting any extra money toward your mortgage that has only a 5 percent interest rate.
Further, unlike many other debts, mortgage debt can be deducted from income taxes for those who itemize their taxes.
Also consider what other investments you can make with the money that might give you a higher return. If you can make significantly more with an investment and have an emergency savings fund set aside, you can make a bigger financial impact investing than paying off your mortgage. It is worth noting volatilility is the price of admission for higher earning asset classes like equities & profits on equites can be taxed with either short-term or long-term capital gains taxes, so the hurdle rate for investments would be the interest rate on your mortgage plus the rate the investments are taxed at.
Paying extra toward your mortgage may not make sense if you aren't planning to stay in your home for more than a few years. You won't pay down your equity fast enough to make it worth your while if you are planning to move in less than five to 10 years. You should also carefully evaluate the trends in your local housing market before you pay extra toward your mortgage.
Calculating Your Mortgage Overpayment Savings
Start Paying More Early & Save Big
Want to build your home equity quicker? Use this free calculator to see how even small extra payments will save you years of payments and thousands of Dollars of additional interest cost. Making extra payments early in the loan saves you much more money over the life of the loan as the extinguised principal is no longer accruing interest for the remainder of the loan. The earlier you begin paying extra the more money you'll save.
Use the above mortgage over-payment calculator to determine your potential savings by making extra payments toward your mortgage. Put in any amount that you want, from $10 to $1,000, to find out what you can save over the life of your loan. The results can help you weigh your financial options to see if paying down your mortgage will have the most benefits or if you should focus your efforts on other investment options. As you nearly complete your mortgage payments early be sure to check if your loan has a prepayment penalty. If it does, you may want to leave a small balance until the prepayment penalty period expires.
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