Mortgage Payoff Calculator
Thinking about increasing the amount of your monthly mortgage payments or your payment frequency and want to estimate how much you could save on interest or how much faster you could pay your mortgage off? Our handy Mortgage Payoff Calculator below will help you estimate how much you could be saving in the long run by increasing your mortgage payment or frequency of payments. Simply input how many years you have left on your mortgage term, your original mortgage term, original mortgage amount, how much you’ll be adding to your principal payments, your interest rate, and let our calculator do the rest!
The calculator tool provided is for informational purposes only and does not reflect any specific mortgage or home equity line of credit offered by Leader Bank or any specific terms that may be available for such products. For information on available Leader Bank products and services, please contact a Leader Bank loan officer directly. Examples of monthly payment amounts shown in calculators does not include taxes, insurance or any condominium or HOA fees applicable; as such your total monthly housing payment would be higher. For any adjustable or variable rate loan examples provided, interest rate may increase after consummation and your fully indexed rate, annual percentage rate and monthly principal and interest rates may be higher.
What is the Principal Payment and Interest Payment on a Mortgage?
Mortgage payments are broken into two parts – principal and interest. The principal represents the payment towards the balance of the original loan amount that was borrowed while the interest refers to the accrued interest owed on that balance based on the loan’s interest rate. Your monthly mortgage payment will go toward any unpaid interest due first, with the remainder of the payment being applied toward the principal on the loan.
At the beginning of a mortgage term, more of your monthly payment will go toward the interest portion of your loan. However, as you continue to make monthly payments and the principal amount of your loan decreases, interest costs will decrease. This means that with every monthly mortgage payment you make, you’ll be paying less toward interest and more toward principal.
The Mortgage Payoff Calculator above will help you determine how increasing your monthly mortgage payment amount or frequency will impact your payoff schedule and save you money on interest. Below we’ll outline some of the common strategies available to homeowners looking to ramp up their mortgage payments.
What Are Extra Payments on a Mortgage?
Extra payments are exactly what the term sounds like – one-time or recurring payments on your mortgage in addition to your regularly scheduled mortgage payments. Even one-time extra payments can help save you money on interest costs in the long run.
What Are Biweekly Mortgage Payments?
A biweekly payment schedule involves making half of your regular mortgage payments every two weeks, which results in 26 half payments every year or 13 full monthly payments each year. By paying one extra monthly mortgage payment annually, homeowners can see meaningful savings on their mortgage. This is a good option for homeowners who receive a paycheck biweekly or twice monthly.
Refinancing to a Shorter Mortgage Term
Refinancing a mortgage is another option available to homeowners looking to save money on the life of their loan. Many homeowners look to refinance to a shorter loan term, effectively taking out a new loan to pay off their existing mortgage, usually when interest rates drop to below their existing rate. Some lenders (like Leader Bank) offer no-cost refinances, while others have closing costs and fees associated with refinancing. When determining whether a refinance makes sense for you, be sure to incorporate any of these up front fees in your calculations. You can use our Mortgage Refinance Calculator to help determine whether a refinance makes sense for you.
What Are Mortgage Prepayment Penalties?
Another thing to be aware of before making extra payments on your mortgage is whether your lender assesses prepayment penalties. Why would a lender penalize you for paying off your mortgage early? Primarily because mortgage loans represent years of reliable income for lenders. Prepayment penalties are usually a percentage of the interest the lender would have otherwise collected over the next several months and can also include an additional percentage of the outstanding balance on the loan. Again, it’s important to determine whether their lender will assess any prepayment penalties before making extra payments on their mortgage.
