Additional Payment Calculator

One of the largest costs associated with a mortgage is the amount of interest paid on the loan over time. Some homeowners may choose to make additional payments each month in order to pay off their loans more quickly, which also results in paying less interest. This can save homeowners thousands of dollars over the life of the loan. 

Considering extra payments? Check out this additional payments calculator to find out if making mortgage payments in addition to your minimum monthly requirements makes sense for your financial goals.

What is an Additional Payments Calculator? 

An additional payments calculator (also known as an early mortgage pay off calculator) is a financial tool that helps homeowners determine how much more they should add to their monthly payments to pay off a home loan faster. 

This calculator will show homeowners:

  1.  How much they should put towards the principal on a loan to pay it off faster 
  2. How much they could save on interest by making extra payments 

Furthermore, an additional payment calculator can help homeowners set a goal by establishing a milestone objective showing when they could potentially attain full homeownership. 

How Are Additional Payments Calculated? 

Using an additional payments calculator highlights how far you are from reaching your goal of achieving homeownership by the date you have set. There are several input variables that go into this calculator to determine how much extra you should pay per month. 

To use the additional payments calculator accurately, you will need to get out your Closing Disclosure and locate the following information:

  • Loan Amount. If you don’t know your original loan amount (or are already making additional payments), use your current balance as an input for this value.
  • Your Remaining Balance. This input value shows how much is still outstanding on the original loan amount.
  • Loan Term. Most loan terms are packaged in 15- or 30-year mortgages. Making additional payments offers homeowners flexibility when it comes to shortening a term. However, rather than making extra payments, some homeowners may instead want to consider refinancing from a 30-year fixed mortgage loan into a 15-year fixed mortgage loan which may put them in a better position financially.
  • Interest Rate. The amount of interest accrued during the life of your loan will be a determining factor in how quickly you can get to paying off the principal balance on your loan. 
  • Years Left on Your Loan. This input is measured in years, so round up or down depending on how many months are included in this measurement. 
  • Number of Years in Which You Want to Pay Off Your Loan. This input is important because it represents the time frame of your goal to pay off your loan. As with the “Years Left” variable, you will need to calculate this input using whole numbers, so round up or down in terms of years. You can also adjust this figure to see how different values affect your total potential savings. 

After you have input these values into your additional payments calculator, the calculator will show you how much you would have to pay in principal and interest every month to meet the payoff goal. 

The calculator tool will also provide you with a loan comparison summary. This summary shows you how much you could save by comparing your original monthly principal-and-interest payment to your new monthly principal-and-interest payment. Other monthly costs—such as taxes, homeowners insurance, and private mortgage insurance (if applicable)—will also need to be taken into account.

How Do Additional Payments Affect Loan Repayment?

The reduction process on your loan over time is known as amortization. Amortization is an important aspect of the loan process for homeowners to understand, because it clarifies what portion of a loan payment consists of interest versus principal. Use this measurement as a guide for determining how much you want to make in additional payments to reach your financial goals.

Additional payments can be done yearly or as a one-time, lump-sum payment. Your overall debt on the loan will be reduced more quickly as regular payments are applied to the principal and interest on the loan. 

Typically, additional payments will initially be applied more towards the interest on the loan in the beginning (with a smaller amount applied to pay down the principal). But assuming these additional payments continue regularly, the interest on the house will reach a break-even point. Then, the majority of the additional payments made will be applied to the actual principal on a loan. 

By having an additional payment plan of action, homeowners can see the finish line to financial freedom on the horizon more quickly and clearly.

How Can The Home Loan Expert Help?

The Home Loan Expert wouldn’t be where we are today without knowing that our clients’ satisfaction is the most important factor in any loan we close. 

We’re honored to have been able to expand our services nationwide, in our continued commitment to providing customer-focused lending services. Our friendly Experts reflect and represent the same communities we serve
and will be glad to advise you on an additional mortgage payment plan.  Let us help you set a goal that will help put you on the way to better financial health. We are ready for your call at (866) 221-1926, and we’re also available to chat online anytime.


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