Early Mortgage Payoff Calculator

Understanding the Benefits of Paying Off Your Mortgage Early

The primary benefit for most people is the interest savings. By paying off your mortgage sooner, you can significantly reduce the amount of interest you'll pay over the life of the loan. Sounds obvious, but this can translate into thousands, or even tens of thousands, of dollars in savings.

Another benefit is the peace of mind that comes with being debt-free. Can you put a price on peace of mind? Imagine the freedom of not having a monthly mortgage payment hanging over your head. Wouldn't you instead use that extra money to invest in your retirement, leave an inheritance for your grandchildren, or even take that dream vacation you've always wanted?

Frequently Asked Questions

Is it worth paying off my mortgage early if I have a low-interest rate mortgage?

There is no “one-size-fits-all” answer to this question. But it can save you thousands of dollars in interest and provide a sense of financial security. Consider your financial situation and priorities before making this decision. Here are some questions to consider to get you started:

• How important is peace of mind? Will owning your home outright provide emotional or financial security?
• How long are you staying in the home? Is it worth paying off a home you may sell soon?
• Do you have an emergency fund? Will paying off the mortgage deplete cash reserves?
• Are you approaching retirement and want to anticipate the challenges that come with a fixed income?
• Do you have other investment options that would yield a higher return?

How can I afford to pay off my mortgage early?

In this inflationary economy, it can be challenging but not impossible. It generally comes down to two things:

1. Cutting expenses
2. Increasing income

You can do both or do one or the other. Audit your bank account and make sure you know where every penny is going.

How are other people able to pay off their homes?

Quite frankly, unless they come into a lump sum of money, it is by getting acquainted with delaying gratification and overcoming the “fear of missing out.” Like with any worthwhile goal, a temporary sacrifice is necessary. Don't worry—every sacrifice will make accomplishing your goal that much sweeter!

How do I make sure the bank applies my extra mortgage payment to the principal balance?

1. Check Online Payment Options: Many lenders offer the option of allocating payments directly to the principal when using their online portal.
2. Specify Principal in Payment: Indicate in your payment note or memo that the extra amount is to be applied to the principal.
3. Contact Your Lender: Call your lender to confirm their process for applying extra payments to the principal.
4. Review Statements: Regularly check your mortgage statements to ensure the extra payments are correctly applied.

Step-by-Step Guide to Using the Calculator

• Create a plan: Determine how much additional payment you can afford and set a realistic timeline for achieving your goal. Remember to factor in any potential changes in your financial situation.
• Gather your loan details: You will need the principal amount, interest rate, and remaining term of the loan.
• Enter your loan details: You can enter an additional payment amount and frequency. This could be a one-time payment or a recurring monthly or annual payment. Our early mortgage calculator offers a lot of flexibility.
• Explore the results: See how much time and money you can save by paying off your mortgage early.
• Adjust the parameters: Play around with the figures to see what makes sense for you. For example, you can increase or decrease the additional payment amount to see how it affects the payoff timeline and interest savings.
• Take action: Start making additional payments towards your mortgage principal. Set up automatic transfers or reminders to ensure that you stay on track. Calbrea allows you to revisit your saved calculator and make adjustments in the future as needed.

Terms to Remember:

• Original Mortgage Amount: The total loan amount you borrowed when you first got your mortgage.
• First Payment Date: The date you made your very first mortgage payment to the lender.
• Loan Term: The length of time you have to repay your mortgage (usually 15 or 30 years).
• Interest Rate: The percentage charged annually by the lender for borrowing money, which helps to determine your monthly payment.
• First Payment Date: The month you started making payments on your original mortgage, roughly.
• Principal Payment Amount: The additional money you plan to pay each month to reduce your loan faster.
• Principal Payment Frequency: How often you can afford to make extra payments.
• Principal Payment Start Date: When you plan to start making extra mortgage payments.
• Interest Savings: How much money you'll save on interest if you make these extra payments until your mortgage is paid off.