Goals & planning
Mortgage prepayment calculator
The same 100k prepaid can save very different interest under 'shorter term' vs 'lower payment'. Enter your remaining balance and months — both routes are computed side by side.
Now vs after prepaying
4,680.89
current monthly payment · remaining interest 323,414.02
Two prepayment routes
| Route | Payment | Months | Interest | Net saved |
|---|---|---|---|---|
| Keep as is | 4,680.89 | 240 | 323,414.02 | — |
| Shorter term | 4,680.89 | 199 | 230,322.69 | +93,091.32 |
| Lower payment | 4,095.78 | 240 | 282,987.26 | +40,426.75 |
Shorter term saves ≈ 52,664.57 more than lowering the payment.
Two repayment types, two formulas
Equal installment: a fixed payment = P·i(1+i)ⁿ ÷ [(1+i)ⁿ−1], with i the monthly rate and n the remaining months. Equal principal: a fixed principal slice each month plus interest on the outstanding balance, so the payment declines monthly.
The model works from today's remaining balance and months; the lump sum lands before the next installment. Past payments are sunk — they don't enter the decision.
Shorter term vs lower payment
Shorter term: the payment stays, the balance clears faster, and every subsequent month's interest is computed on a smaller base — typically the bigger interest saving. Lower payment: the term stays, cash flow eases immediately, but the saving is smaller.
Many lenders allow both, some charge a prepayment penalty (often ~1% of the lump sum or a few months' interest). Enter a penalty rate and the tool nets it against the saving. Your loan contract governs the real terms.
Frequently asked
Why does 'shorter term' usually save more?
Interest accrues monthly on the outstanding balance. Keeping the payment and cutting the term drives the balance down faster and removes whole months of interest; lowering the payment keeps the balance decaying on the original schedule.
Where do I find remaining balance and months?
Your lender's app or latest amortization statement shows both. For combined public-fund + commercial loans, run each part separately.
What is 'first payment' under equal principal?
Equal-principal payments decline every month, so there is no single payment figure. The table shows next month's payment plus the monthly decline.
How do I enter a prepayment penalty?
As a percentage of the lump sum per your contract — e.g. 1 for 1%. It is deducted from the interest saved to give the net saving; use 0 if none.
How about paying off the whole loan?
Enter a prepayment amount at least equal to the remaining balance — the tool reports that all remaining interest is saved, less any penalty.
The model applies the lump sum before the next installment; rate resets, payment dates and lender-specific rules are outside it. Payments round to cents and the final installment clears the residual. Estimates only — your lender's figures govern.