Use this calculator to determine your mortgage payoff date and see how increasing your monthly payments can help you become debt-free faster.
Calculating your mortgage payoff involves determining how long it will take to fully repay your loan and how much interest you'll save by making extra payments. This guide will walk you through the process of calculating your mortgage payoff and interpreting the results.
The formula to calculate the number of months to pay off a mortgage is:
N = [log(P) - log(P - (B * r) / (1 - (1 + r)^-n))] / log(1 + r)
Where:
N is the number of months to pay off the mortgage
P is the monthly payment (including any extra payment)
B is the current loan balance
r is the monthly interest rate (annual rate divided by 12)
n is the original loan term in months
1. Determine your current loan balance, interest rate, and monthly payment
2. Calculate the monthly interest rate by dividing the annual rate by 12
3. Decide on any extra monthly payment you want to make
4. Use the formula or an iterative process to calculate the number of months until payoff
5. Compare the results with and without extra payments to see the time and interest saved
Let's calculate the mortgage payoff for a loan with the following details:
Current Loan Balance: $200,000
Annual Interest Rate: 4%
Monthly Payment: $1,000
Extra Monthly Payment: $200
Monthly Interest Rate = 4% / 12 = 0.3333%
Total Monthly Payment = $1,000 + $200 = $1,200
We'll use a loop to calculate the payoff month by month:
Remaining Balance: $200,000
Month 1:
Interest Payment: $200,000 × 0.3333% = $666.67
Principal Payment: $1,200 - $666.67 = $533.33
New Balance: $200,000 - $533.33 = $199,466.67
Month 2:
Interest Payment: $199,466.67 × 0.3333% = $664.89
Principal Payment: $1,200 - $664.89 = $535.11
New Balance: $199,466.67 - $535.11 = $198,931.56
...continue this process until the balance reaches zero
After completing the calculations, we find that:
By making extra payments, you save 55 months (4 years and 7 months) and thousands of dollars in interest.
This bar chart illustrates the comparison between the original mortgage payoff schedule and the accelerated payoff plan with extra payments in our example calculation.