1. What is the Mortgage With Extra Payments Formula?

The mortgage with extra payments formula calculates how much faster you can pay off your loan by making additional payments each month. It shows the new loan term in months when you pay more than the minimum required payment.

2. How Does the Calculator Work?

The calculator uses the following equation:

Where:

• \( n_{\text{new}} \) — New loan term in months
• \( \text{PMT} \) — Original monthly payment (USD)
• \( \text{Extra} \) — Additional monthly payment (USD)
• \( \text{Balance} \) — Current loan balance (USD)
• \( r \) — Monthly interest rate (decimal)

Explanation: The formula calculates how many months it will take to pay off the loan when making extra payments, accounting for the reduced interest costs from the faster principal reduction.

3. Importance of Extra Payments

Details: Making extra payments can significantly reduce the total interest paid and shorten the loan term. Even small additional amounts can have a large impact over time.

4. Using the Calculator

Tips: Enter your current monthly payment, the extra amount you can pay, your remaining balance, and the monthly interest rate (annual rate divided by 12). All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How much can extra payments save me?
A: Depending on the loan size and term, extra payments can save thousands in interest and cut years off your mortgage.

Q2: Is it better to make extra payments or refinance?
A: This depends on current rates and how much extra you can pay. Use this calculator to compare scenarios.

Q3: How do I find my monthly interest rate?
A: Divide your annual rate by 12 (e.g., 6% annual = 0.06/12 = 0.005 monthly).

Q4: Should I pay extra principal or invest?
A: Compare your mortgage rate to potential investment returns. Paying down debt gives a guaranteed return equal to your interest rate.

Q5: Are there prepayment penalties?
A: Most modern mortgages don't have them, but check your loan terms to be sure.