1. What is a Mortgage Calculator With Extra Payments?

Definition: This calculator shows how making extra payments affects your mortgage payoff timeline and total interest paid.

Purpose: It helps homeowners understand the benefits of making additional principal payments toward their mortgage.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( B_k \) — Current balance (USD)
• \( B_{k-1} \) — Previous balance (USD)
• \( r \) — Monthly interest rate (decimal)
• \( M \) — Regular monthly payment (USD)
• \( E \) — Extra monthly payment (USD)

Explanation: Each month, interest is added to the balance, then both the regular payment and extra payment are subtracted.

3. Benefits of Extra Mortgage Payments

Details: Extra payments directly reduce principal, leading to less interest paid over time and earlier loan payoff.

4. Using the Calculator

Tips: Enter your loan amount, interest rate, loan term, and the extra amount you can pay each month. All financial values must be > 0.

5. Frequently Asked Questions (FAQ)

Q1: How much can I save with extra payments?
A: Even small extra payments can save thousands in interest and shorten your loan term by years.

Q2: Should I pay extra each month or make lump sum payments?
A: Regular extra payments have a greater impact than occasional lump sums due to compounding.

Q3: Are there prepayment penalties?
A: Most modern mortgages don't have prepayment penalties, but check your loan terms.

Q4: Is it better to invest or pay extra on mortgage?
A: This depends on your mortgage rate vs. expected investment returns and risk tolerance.

Q5: How do extra payments affect amortization?
A: Extra payments accelerate principal reduction, causing more of each subsequent payment to go toward principal.