What is the Mortgage Payoff?
Every extra dollar toward principal stops accruing interest for the entire remaining loan term. On a 30-year mortgage the effect is enormous, because interest is heavily front-loaded — in early years most of your payment is interest, not principal.
Paying an extra $300 a month is effectively a guaranteed, risk-free return equal to your mortgage rate.
Formula & worked example
Balance = Balance − (Payment + Extra − Interest)
Worked example: a $320,000 balance at 6.5% with 28 years left has a payment of about $2,070. Adding $300 a month pays it off in roughly 20.3 years instead of 28 — nearly 8 years earlier — and saves about $119,000 in interest.
How to use this mortgage payoff calculator
- Enter your current balance, not the original loan amount.
- Use your actual rate and the years remaining.
- Enter an extra amount you can sustain every month.
- Compare the table rows to see how each increment performs.
Smart tips
- Always specify "apply to principal" when making extra payments, or the servicer may just credit it to next month.
- Biweekly payments produce 13 monthly payments a year and typically cut 4–6 years off a 30-year loan.
- Compare against investing: if your mortgage is 6.5% and you expect 7% from the market, it is close — but the mortgage payoff is guaranteed.
- Keep your emergency fund intact first. Home equity is not accessible in a crisis without a loan.
- If your rate is under 4%, investing the extra usually beats prepaying.
Frequently asked questions
Is it better to pay off my mortgage early or invest?
Compare your mortgage rate with your expected after-tax return. Below 4%, investing usually wins; above 6.5%, paying down is competitive and guaranteed.
How much does one extra payment a year save?
On a 30-year mortgage, one extra payment annually typically cuts 4–6 years and tens of thousands in interest.
Do extra payments lower my monthly payment?
No, they shorten the term. Your required payment stays the same unless you formally recast the loan.
Should I refinance instead of prepaying?
If rates have fallen meaningfully, refinancing may save more. Run both; they are not mutually exclusive.
Want the theory behind the numbers? Read our mortgage guides on the Money Blog.
Written by Gurjeet Singh, Sharpen Solutions. Last reviewed 8 Sep 2026. How we check these numbers.