Enter the balance you still owe on your mortgage, your interest rate and the principal and interest part of your monthly payment. Leave out taxes and insurance, since they do not reduce the loan. You will first see how long the loan will last and how much interest is left if you change nothing.
Now try the extra payment boxes. You can add a regular extra amount each month, a single lump sum such as a bonus or tax refund, or both. The calculator shows the new payoff time, the interest you will pay and how much you save in both time and money.
If you have a goal in mind, enter the number of years in which you want to be mortgage free. The tool tells you the monthly payment needed to reach that date and how much extra that means compared with what you pay now. This is a simple way to decide whether a goal is realistic.
Before you send extra money, check with your lender that it will be applied to the principal and that there is no penalty for early repayment.
The calculator follows your loan month by month. Each month the interest is the balance times the monthly rate, which is the yearly rate divided by 1200. The rest of the payment reduces the balance. It repeats until the balance reaches zero and counts the months and the interest on the way.
A lump sum is taken off the balance at the start. For the target date, the needed payment is: payment = balance x r / (1 – (1 + r) raised to minus n), where n is the target in months. The extra amount is that payment minus your current payment.