1. What is Mortgage Prepayment?

Mortgage prepayment involves paying more than your regular monthly payment, which reduces your principal faster and saves on interest. This calculator shows how much time you can save on your mortgage by making extra payments.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( Original\ n \) — Original number of monthly payments
• \( New\ n \) — New number of payments with extra amount

Explanation: The calculator first determines your regular monthly payment, then recalculates how many payments would be needed with your extra payment amount.

3. Benefits of Extra Payments

Details: Making extra payments can significantly reduce the total interest paid and shorten your loan term. Even small additional amounts can make a big difference over time.

4. Using the Calculator

Tips: Enter your original loan amount, interest rate, loan term in years, and the extra amount you plan to pay each month. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How much can I save with extra payments?
A: Savings depend on your loan details and extra payment amount. Even $100 extra per month can save thousands in interest and years off your mortgage.

Q2: Should I pay extra principal or refinance?
A: This depends on your interest rate and how much you can afford to pay extra. Run both scenarios to compare.

Q3: Are there prepayment penalties?
A: Some loans have prepayment penalties, especially in early years. Check your loan terms before making extra payments.

Q4: Is it better to pay extra or invest?
A: This depends on your mortgage rate vs. expected investment returns. Generally, if your mortgage rate is higher than expected investment returns, paying extra may be better.

Q5: How often should I make extra payments?
A: Regular extra payments (monthly) have the greatest impact, but even annual lump sums can help reduce your principal.