Mortgage Payoff Calculator

Calculate a mortgage payoff date and see how much faster you can pay it off by increasing your monthly payment.

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Mortgage Payoff Summary:

Estimated Payoff Date:
Oct 2046
Time to Pay Off:
23 yrs and 10 mos
Total Interest:
$286,012.03
Total Payments:
$786,012.03

Amortization Schedule:

Amortization schedule for a $500,000.00 loan with a 4.125% interest rate and a 286-month term.
DatePaymentPrincipalInterestRemaining Balance
Jan 2023$2,750.00$1,031.25$1,718.75$498,968.75
Feb 2023$2,750.00$1,034.79$1,715.21$497,933.96
Mar 2023$2,750.00$1,038.35$1,711.65$496,895.61
Apr 2023$2,750.00$1,041.92$1,708.08$495,853.69
May 2023$2,750.00$1,045.50$1,704.50$494,808.19
Jun 2023$2,750.00$1,049.10$1,700.90$493,759.09
Jul 2023$2,750.00$1,052.70$1,697.30$492,706.39
Aug 2023$2,750.00$1,056.32$1,693.68$491,650.07
Sep 2023$2,750.00$1,059.95$1,690.05$490,590.12
Oct 2023$2,750.00$1,063.60$1,686.40$489,526.52
Nov 2023$2,750.00$1,067.25$1,682.75$488,459.27
Dec 2023$2,750.00$1,070.92$1,679.08$487,388.35
Jan 2024$2,750.00$1,074.60$1,675.40$486,313.75
Feb 2024$2,750.00$1,078.30$1,671.70$485,235.45
Mar 2024$2,750.00$1,082.00$1,668.00$484,153.45
Apr 2024$2,750.00$1,085.72$1,664.28$483,067.73
May 2024$2,750.00$1,089.45$1,660.55$481,978.28
Jun 2024$2,750.00$1,093.20$1,656.80$480,885.08
Jul 2024$2,750.00$1,096.96$1,653.04$479,788.12
Aug 2024$2,750.00$1,100.73$1,649.27$478,687.39
Sep 2024$2,750.00$1,104.51$1,645.49$477,582.88
Oct 2024$2,750.00$1,108.31$1,641.69$476,474.57
Nov 2024$2,750.00$1,112.12$1,637.88$475,362.45
Dec 2024$2,750.00$1,115.94$1,634.06$474,246.51
Jan 2025$2,750.00$1,119.78$1,630.22$473,126.73
Feb 2025$2,750.00$1,123.63$1,626.37$472,003.10
Mar 2025$2,750.00$1,127.49$1,622.51$470,875.61
Apr 2025$2,750.00$1,131.37$1,618.63$469,744.24
May 2025$2,750.00$1,135.25$1,614.75$468,608.99
Jun 2025$2,750.00$1,139.16$1,610.84$467,469.83
Jul 2025$2,750.00$1,143.07$1,606.93$466,326.76
Aug 2025$2,750.00$1,147.00$1,603.00$465,179.76
Sep 2025$2,750.00$1,150.94$1,599.06$464,028.82
Oct 2025$2,750.00$1,154.90$1,595.10$462,873.92
Nov 2025$2,750.00$1,158.87$1,591.13$461,715.05
Dec 2025$2,750.00$1,162.85$1,587.15$460,552.20
Jan 2026$2,750.00$1,166.85$1,583.15$459,385.35
Feb 2026$2,750.00$1,170.86$1,579.14$458,214.49
Mar 2026$2,750.00$1,174.89$1,575.11$457,039.60
Apr 2026$2,750.00$1,178.93$1,571.07$455,860.67
May 2026$2,750.00$1,182.98$1,567.02$454,677.69
Jun 2026$2,750.00$1,187.05$1,562.95$453,490.64
Jul 2026$2,750.00$1,191.13$1,558.87$452,299.51
Aug 2026$2,750.00$1,195.22$1,554.78$451,104.29
Sep 2026$2,750.00$1,199.33$1,550.67$449,904.96
Oct 2026$2,750.00$1,203.45$1,546.55$448,701.51
Nov 2026$2,750.00$1,207.59$1,542.41$447,493.92
Dec 2026$2,750.00$1,211.74$1,538.26$446,282.18
Jan 2027$2,750.00$1,215.91$1,534.09$445,066.27
Feb 2027$2,750.00$1,220.08$1,529.92$443,846.19
Mar 2027$2,750.00$1,224.28$1,525.72$442,621.91
Apr 2027$2,750.00$1,228.49$1,521.51$441,393.42
May 2027$2,750.00$1,232.71$1,517.29$440,160.71
Jun 2027$2,750.00$1,236.95$1,513.05$438,923.76
Jul 2027$2,750.00$1,241.20$1,508.80$437,682.56
Aug 2027$2,750.00$1,245.47$1,504.53$436,437.09
Sep 2027$2,750.00$1,249.75$1,500.25$435,187.34
Oct 2027$2,750.00$1,254.04$1,495.96$433,933.30
Nov 2027$2,750.00$1,258.35$1,491.65$432,674.95
Dec 2027$2,750.00$1,262.68$1,487.32$431,412.27
Jan 2028$2,750.00$1,267.02$1,482.98$430,145.25
Feb 2028$2,750.00$1,271.38$1,478.62$428,873.87
Mar 2028$2,750.00$1,275.75$1,474.25$427,598.12
Apr 2028$2,750.00$1,280.13$1,469.87$426,317.99
May 2028$2,750.00$1,284.53$1,465.47$425,033.46
Jun 2028$2,750.00$1,288.95$1,461.05$423,744.51
Jul 2028$2,750.00$1,293.38$1,456.62$422,451.13
Aug 2028$2,750.00$1,297.82$1,452.18$421,153.31
Sep 2028$2,750.00$1,302.29$1,447.71$419,851.02
Oct 2028$2,750.00$1,306.76$1,443.24$418,544.26
Nov 2028$2,750.00$1,311.25$1,438.75$417,233.01
Dec 2028$2,750.00$1,315.76$1,434.24$415,917.25
Jan 2029$2,750.00$1,320.28$1,429.72$414,596.97
Feb 2029$2,750.00$1,324.82$1,425.18$413,272.15
Mar 2029$2,750.00$1,329.38$1,420.62$411,942.77
Apr 2029$2,750.00$1,333.95$1,416.05$410,608.82
May 2029$2,750.00$1,338.53$1,411.47$409,270.29
Jun 2029$2,750.00$1,343.13$1,406.87$407,927.16
Jul 2029$2,750.00$1,347.75$1,402.25$406,579.41
Aug 2029$2,750.00$1,352.38$1,397.62$405,227.03
Sep 2029$2,750.00$1,357.03$1,392.97$403,870.00
Oct 2029$2,750.00$1,361.70$1,388.30$402,508.30
Nov 2029$2,750.00$1,366.38$1,383.62$401,141.92
Dec 2029$2,750.00$1,371.07$1,378.93$399,770.85
Jan 2030$2,750.00$1,375.79$1,374.21$398,395.06
Feb 2030$2,750.00$1,380.52$1,369.48$397,014.54
Mar 2030$2,750.00$1,385.26$1,364.74$395,629.28
Apr 2030$2,750.00$1,390.02$1,359.98$394,239.26
May 2030$2,750.00$1,394.80$1,355.20$392,844.46
Jun 2030$2,750.00$1,399.60$1,350.40$391,444.86
Jul 2030$2,750.00$1,404.41$1,345.59$390,040.45
Aug 2030$2,750.00$1,409.24$1,340.76$388,631.21
Sep 2030$2,750.00$1,414.08$1,335.92$387,217.13
Oct 2030$2,750.00$1,418.94$1,331.06$385,798.19
Nov 2030$2,750.00$1,423.82$1,326.18$384,374.37
Dec 2030$2,750.00$1,428.71$1,321.29$382,945.66
Jan 2031$2,750.00$1,433.62$1,316.38$381,512.04
Feb 2031$2,750.00$1,438.55$1,311.45$380,073.49
Mar 2031$2,750.00$1,443.50$1,306.50$378,629.99
Apr 2031$2,750.00$1,448.46$1,301.54$377,181.53
May 2031$2,750.00$1,453.44$1,296.56$375,728.09
Jun 2031$2,750.00$1,458.43$1,291.57$374,269.66
Jul 2031$2,750.00$1,463.45$1,286.55$372,806.21
Aug 2031$2,750.00$1,468.48$1,281.52$371,337.73
Sep 2031$2,750.00$1,473.53$1,276.47$369,864.20
Oct 2031$2,750.00$1,478.59$1,271.41$368,385.61
Nov 2031$2,750.00$1,483.67$1,266.33$366,901.94
Dec 2031$2,750.00$1,488.77$1,261.23$365,413.17
Jan 2032$2,750.00$1,493.89$1,256.11$363,919.28
Feb 2032$2,750.00$1,499.03$1,250.97$362,420.25
Mar 2032$2,750.00$1,504.18$1,245.82$360,916.07
Apr 2032$2,750.00$1,509.35$1,240.65$359,406.72
May 2032$2,750.00$1,514.54$1,235.46$357,892.18
Jun 2032$2,750.00$1,519.75$1,230.25$356,372.43
Jul 2032$2,750.00$1,524.97$1,225.03$354,847.46
Aug 2032$2,750.00$1,530.21$1,219.79$353,317.25
Sep 2032$2,750.00$1,535.47$1,214.53$351,781.78
Oct 2032$2,750.00$1,540.75$1,209.25$350,241.03
Nov 2032$2,750.00$1,546.05$1,203.95$348,694.98
Dec 2032$2,750.00$1,551.36$1,198.64$347,143.62
Jan 2033$2,750.00$1,556.69$1,193.31$345,586.93
Feb 2033$2,750.00$1,562.04$1,187.96$344,024.89
Mar 2033$2,750.00$1,567.41$1,182.59$342,457.48
Apr 2033$2,750.00$1,572.80$1,177.20$340,884.68
May 2033$2,750.00$1,578.21$1,171.79$339,306.47
Jun 2033$2,750.00$1,583.63$1,166.37$337,722.84
Jul 2033$2,750.00$1,589.08$1,160.92$336,133.76
Aug 2033$2,750.00$1,594.54$1,155.46$334,539.22
Sep 2033$2,750.00$1,600.02$1,149.98$332,939.20
Oct 2033$2,750.00$1,605.52$1,144.48$331,333.68
Nov 2033$2,750.00$1,611.04$1,138.96$329,722.64
Dec 2033$2,750.00$1,616.58$1,133.42$328,106.06
Jan 2034$2,750.00$1,622.14$1,127.86$326,483.92
Feb 2034$2,750.00$1,627.71$1,122.29$324,856.21
Mar 2034$2,750.00$1,633.31$1,116.69$323,222.90
Apr 2034$2,750.00$1,638.92$1,111.08$321,583.98
May 2034$2,750.00$1,644.56$1,105.44$319,939.42
Jun 2034$2,750.00$1,650.21$1,099.79$318,289.21
Jul 2034$2,750.00$1,655.88$1,094.12$316,633.33
Aug 2034$2,750.00$1,661.57$1,088.43$314,971.76
Sep 2034$2,750.00$1,667.28$1,082.72$313,304.48
Oct 2034$2,750.00$1,673.02$1,076.98$311,631.46
Nov 2034$2,750.00$1,678.77$1,071.23$309,952.69
Dec 2034$2,750.00$1,684.54$1,065.46$308,268.15
Jan 2035$2,750.00$1,690.33$1,059.67$306,577.82
Feb 2035$2,750.00$1,696.14$1,053.86$304,881.68
Mar 2035$2,750.00$1,701.97$1,048.03$303,179.71
Apr 2035$2,750.00$1,707.82$1,042.18$301,471.89
May 2035$2,750.00$1,713.69$1,036.31$299,758.20
Jun 2035$2,750.00$1,719.58$1,030.42$298,038.62
Jul 2035$2,750.00$1,725.49$1,024.51$296,313.13
Aug 2035$2,750.00$1,731.42$1,018.58$294,581.71
Sep 2035$2,750.00$1,737.38$1,012.62$292,844.33
Oct 2035$2,750.00$1,743.35$1,006.65$291,100.98
Nov 2035$2,750.00$1,749.34$1,000.66$289,351.64
Dec 2035$2,750.00$1,755.35$994.65$287,596.29
Jan 2036$2,750.00$1,761.39$988.61$285,834.90
Feb 2036$2,750.00$1,767.44$982.56$284,067.46
Mar 2036$2,750.00$1,773.52$976.48$282,293.94
Apr 2036$2,750.00$1,779.61$970.39$280,514.33
May 2036$2,750.00$1,785.73$964.27$278,728.60
Jun 2036$2,750.00$1,791.87$958.13$276,936.73
Jul 2036$2,750.00$1,798.03$951.97$275,138.70
Aug 2036$2,750.00$1,804.21$945.79$273,334.49
Sep 2036$2,750.00$1,810.41$939.59$271,524.08
Oct 2036$2,750.00$1,816.64$933.36$269,707.44
Nov 2036$2,750.00$1,822.88$927.12$267,884.56
Dec 2036$2,750.00$1,829.15$920.85$266,055.41
Jan 2037$2,750.00$1,835.43$914.57$264,219.98
Feb 2037$2,750.00$1,841.74$908.26$262,378.24
Mar 2037$2,750.00$1,848.07$901.93$260,530.17
Apr 2037$2,750.00$1,854.43$895.57$258,675.74
May 2037$2,750.00$1,860.80$889.20$256,814.94
Jun 2037$2,750.00$1,867.20$882.80$254,947.74
Jul 2037$2,750.00$1,873.62$876.38$253,074.12
Aug 2037$2,750.00$1,880.06$869.94$251,194.06
Sep 2037$2,750.00$1,886.52$863.48$249,307.54
Oct 2037$2,750.00$1,893.01$856.99$247,414.53
Nov 2037$2,750.00$1,899.51$850.49$245,515.02
Dec 2037$2,750.00$1,906.04$843.96$243,608.98
Jan 2038$2,750.00$1,912.59$837.41$241,696.39
Feb 2038$2,750.00$1,919.17$830.83$239,777.22
Mar 2038$2,750.00$1,925.77$824.23$237,851.45
Apr 2038$2,750.00$1,932.39$817.61$235,919.06
May 2038$2,750.00$1,939.03$810.97$233,980.03
Jun 2038$2,750.00$1,945.69$804.31$232,034.34
Jul 2038$2,750.00$1,952.38$797.62$230,081.96
Aug 2038$2,750.00$1,959.09$790.91$228,122.87
Sep 2038$2,750.00$1,965.83$784.17$226,157.04
Oct 2038$2,750.00$1,972.59$777.41$224,184.45
Nov 2038$2,750.00$1,979.37$770.63$222,205.08
Dec 2038$2,750.00$1,986.17$763.83$220,218.91
Jan 2039$2,750.00$1,993.00$757.00$218,225.91
Feb 2039$2,750.00$1,999.85$750.15$216,226.06
Mar 2039$2,750.00$2,006.72$743.28$214,219.34
Apr 2039$2,750.00$2,013.62$736.38$212,205.72
May 2039$2,750.00$2,020.54$729.46$210,185.18
Jun 2039$2,750.00$2,027.49$722.51$208,157.69
Jul 2039$2,750.00$2,034.46$715.54$206,123.23
Aug 2039$2,750.00$2,041.45$708.55$204,081.78
Sep 2039$2,750.00$2,048.47$701.53$202,033.31
Oct 2039$2,750.00$2,055.51$694.49$199,977.80
Nov 2039$2,750.00$2,062.58$687.42$197,915.22
Dec 2039$2,750.00$2,069.67$680.33$195,845.55
Jan 2040$2,750.00$2,076.78$673.22$193,768.77
Feb 2040$2,750.00$2,083.92$666.08$191,684.85
Mar 2040$2,750.00$2,091.08$658.92$189,593.77
Apr 2040$2,750.00$2,098.27$651.73$187,495.50
May 2040$2,750.00$2,105.48$644.52$185,390.02
Jun 2040$2,750.00$2,112.72$637.28$183,277.30
Jul 2040$2,750.00$2,119.98$630.02$181,157.32
Aug 2040$2,750.00$2,127.27$622.73$179,030.05
Sep 2040$2,750.00$2,134.58$615.42$176,895.47
Oct 2040$2,750.00$2,141.92$608.08$174,753.55
Nov 2040$2,750.00$2,149.28$600.72$172,604.27
Dec 2040$2,750.00$2,156.67$593.33$170,447.60
Jan 2041$2,750.00$2,164.09$585.91$168,283.51
Feb 2041$2,750.00$2,171.53$578.47$166,111.98
Mar 2041$2,750.00$2,178.99$571.01$163,932.99
Apr 2041$2,750.00$2,186.48$563.52$161,746.51
May 2041$2,750.00$2,194.00$556.00$159,552.51
Jun 2041$2,750.00$2,201.54$548.46$157,350.97
Jul 2041$2,750.00$2,209.11$540.89$155,141.86
Aug 2041$2,750.00$2,216.70$533.30$152,925.16
Sep 2041$2,750.00$2,224.32$525.68$150,700.84
Oct 2041$2,750.00$2,231.97$518.03$148,468.87
Nov 2041$2,750.00$2,239.64$510.36$146,229.23
Dec 2041$2,750.00$2,247.34$502.66$143,981.89
Jan 2042$2,750.00$2,255.06$494.94$141,726.83
Feb 2042$2,750.00$2,262.81$487.19$139,464.02
Mar 2042$2,750.00$2,270.59$479.41$137,193.43
Apr 2042$2,750.00$2,278.40$471.60$134,915.03
May 2042$2,750.00$2,286.23$463.77$132,628.80
Jun 2042$2,750.00$2,294.09$455.91$130,334.71
Jul 2042$2,750.00$2,301.97$448.03$128,032.74
Aug 2042$2,750.00$2,309.89$440.11$125,722.85
Sep 2042$2,750.00$2,317.83$432.17$123,405.02
Oct 2042$2,750.00$2,325.80$424.20$121,079.22
Nov 2042$2,750.00$2,333.79$416.21$118,745.43
Dec 2042$2,750.00$2,341.81$408.19$116,403.62
Jan 2043$2,750.00$2,349.86$400.14$114,053.76
Feb 2043$2,750.00$2,357.94$392.06$111,695.82
Mar 2043$2,750.00$2,366.05$383.95$109,329.77
Apr 2043$2,750.00$2,374.18$375.82$106,955.59
May 2043$2,750.00$2,382.34$367.66$104,573.25
Jun 2043$2,750.00$2,390.53$359.47$102,182.72
Jul 2043$2,750.00$2,398.75$351.25$99,783.97
Aug 2043$2,750.00$2,406.99$343.01$97,376.98
Sep 2043$2,750.00$2,415.27$334.73$94,961.71
Oct 2043$2,750.00$2,423.57$326.43$92,538.14
Nov 2043$2,750.00$2,431.90$318.10$90,106.24
Dec 2043$2,750.00$2,440.26$309.74$87,665.98
Jan 2044$2,750.00$2,448.65$301.35$85,217.33
Feb 2044$2,750.00$2,457.07$292.93$82,760.26
Mar 2044$2,750.00$2,465.51$284.49$80,294.75
Apr 2044$2,750.00$2,473.99$276.01$77,820.76
May 2044$2,750.00$2,482.49$267.51$75,338.27
Jun 2044$2,750.00$2,491.02$258.98$72,847.25
Jul 2044$2,750.00$2,499.59$250.41$70,347.66
Aug 2044$2,750.00$2,508.18$241.82$67,839.48
Sep 2044$2,750.00$2,516.80$233.20$65,322.68
Oct 2044$2,750.00$2,525.45$224.55$62,797.23
Nov 2044$2,750.00$2,534.13$215.87$60,263.10
Dec 2044$2,750.00$2,542.85$207.15$57,720.25
Jan 2045$2,750.00$2,551.59$198.41$55,168.66
Feb 2045$2,750.00$2,560.36$189.64$52,608.30
Mar 2045$2,750.00$2,569.16$180.84$50,039.14
Apr 2045$2,750.00$2,577.99$172.01$47,461.15
May 2045$2,750.00$2,586.85$163.15$44,874.30
Jun 2045$2,750.00$2,595.74$154.26$42,278.56
Jul 2045$2,750.00$2,604.67$145.33$39,673.89
Aug 2045$2,750.00$2,613.62$136.38$37,060.27
Sep 2045$2,750.00$2,622.61$127.39$34,437.66
Oct 2045$2,750.00$2,631.62$118.38$31,806.04
Nov 2045$2,750.00$2,640.67$109.33$29,165.37
Dec 2045$2,750.00$2,649.74$100.26$26,515.63
Jan 2046$2,750.00$2,658.85$91.15$23,856.78
Feb 2046$2,750.00$2,667.99$82.01$21,188.79
Mar 2046$2,750.00$2,677.16$72.84$18,511.63
Apr 2046$2,750.00$2,686.37$63.63$15,825.26
May 2046$2,750.00$2,695.60$54.40$13,129.66
Jun 2046$2,750.00$2,704.87$45.13$10,424.79
Jul 2046$2,750.00$2,714.16$35.84$7,710.63
Aug 2046$2,750.00$2,723.49$26.51$4,987.14
Sep 2046$2,750.00$2,732.86$17.14$2,254.28
Oct 2046$2,262.03$2,254.28$7.75$0.00
This calculation is based on widely-accepted formulas, but it is not a recommendation for how to handle your finances. Consult with a financial professional before making financial decisions.
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How to Calculate a Mortgage Payoff Date

A mortgage payoff date can be calculated when you know the remaining loan balance, interest rate, and monthly mortgage payment.

The calculator above can show you how much faster you can pay off your home mortgage if you pay more than the monthly payment. Both our loan payoff calculator and the payoff calculator above can be used to calculate this.

Formula to Calculate Interest Paid per Payment

Mortgage interest can be calculated in a two-step process. First, the annual interest rate must be divided by 12 to obtain a periodic interest rate.

Then the remaining principal balance will be multiplied by the periodic interest rate to calculate the monthly interest payment.

The formula below summarizes the interest payment formula:

interest = P \times r

Where:
P = remaining principal balance
r = periodic interest rate

For example, let’s assume you have a loan with a loan balance of $300,000, an annual interest rate of 4%, and a monthly payment of $2,000. Therefore, the periodic interest rate is 0.33% (4% divided by 12).

The payoff calculator above shows that the mortgage will be paid off in 17 years and 5 months. You can use our loan payment calculator to figure out the payment.

The first interest payment will be found by multiplying the principal balance of $300,000 by the periodic interest rate of 0.33%. This comes out to $1,000.

The remaining principal balance fell to $299,000 after the first payment. If we multiply this new amount by 0.33%, we get an interest payment of $996.67 for the second mortgage payment.

This is exactly what the amortization table shows. Try our amortization calculator to build an amortization schedule.

As this shows, the interest payment decreases with each mortgage payment. This is because the principal balance falls every time a payment is made. As the remaining principal balance falls, the interest payment will fall as well.

The final mortgage payment of $2,000 will have an interest payment of $8.57.

Formula to Calculate Principal Paid per Payment

The principal payment is calculated by subtracting the monthly interest payment from the monthly mortgage payment. The formula below summarizes this:

principal = PMT − (P \times r)

Where:
PMT = payment amount
P = remaining principal balance
r = periodic interest rate

In the example above the first interest payment was $1,000. Since the mortgage payment is $2,000, the principal payment will also be $1,000. The second interest payment fell to $996.67, so the second principal payment increased to $1,003.33.

In this case, the principal payment increased. With every payment that occurs, the principal payment will be larger than the previous principal payment.

Since the mortgage payment is fixed and because the interest payment declines, the principal payment must therefore increase. The final mortgage payment of $2,000 has a principal payment of $1,991.43.

How to Estimate an Early Payoff Date

The estimated payoff date is slightly less than the inverse of the increase. For example, if you plan on doubling the monthly payment, the payoff date will be less than half the time. If the monthly payment is tripled, the payoff date will be slightly less than a third of the original payoff date.

In our example, we would pay off the loan in 17 years and 5 months with a $2,000 payment. If we double the payment to $4,000, the payoff time is 7 years and 3 months. If the payment becomes $6,000 per month, the payoff time is 4 years and 7 months.

How Much Do Extra Mortgage Payments Help?

There are two reasons why extra payments reduce the time it takes to pay off a loan. First, it automatically increases the amount that goes to the principal each month.

Also, it reduces future interest payments because the remaining principal balance will be smaller at each time period. Let’s look at each of these in more detail.

First, the principal payment automatically increases. The first payment of $2,000 in our example paid $1,000 towards the principal.

If we increase the monthly payment to $2,100, that extra $100 goes straight to the principal balance, so now $1,100 goes to pay down the principal balance. This is repeated each month. The faster the principal payment goes down, the faster the loan will be paid off in full.

Also, as the remaining principal balance goes down faster, the future interest payments will also be less. This is because interest payments are based on the remaining principal balance.

Both of these work together to reduce the loan payoff time when extra payments are applied to the loan.

Let’s look back at our examples and compare the principal and interest payments of the 3rd payment when we pay $2,000 or $2,100 per month.

With a $2,000 monthly payment, the third payment calls for a principal payment of $1,006.68 and an interest payment of $993.32. With a $2,100 monthly payment, the third payment calls for a principal payment of $1,107.35 and an interest payment of $992.65.

As you can see, the amount that pays down principal is almost $101 greater with a $2,100 monthly payment, even though we only pay an extra $100 a month.

This difference is even greater the further we are in the amortization schedule.