Pay Extra Principal On Mortgage Calculator

Reduced Payments Formula:

\[ n' = \frac{-\log\left(1 - \frac{P \times r}{M + E}\right)}{\log(1 + r)} \]

Principal (P):

USD

Interest Rate (r):

decimal

Monthly Payment (M):

USD

Extra Payment (E):

USD

Reduced Payments (n'):

Unit Converter ▲

Unit Converter ▼

From:	To:

1. What is Pay Extra Principal On Mortgage Calculator?

Definition: This calculator determines how making extra principal payments reduces the total number of payments needed to pay off a mortgage.

Purpose: It helps homeowners understand the impact of additional payments on their mortgage term and total interest paid.

2. How Does the Calculator Work?

The calculator uses the formula:

\[ n' = \frac{-\log\left(1 - \frac{P \times r}{M + E}\right)}{\log(1 + r)} \]

Where:

\( n' \) — Reduced number of payments (unitless)
\( P \) — Principal amount (USD)
\( r \) — Monthly interest rate (decimal)
\( M \) — Regular monthly payment (USD)
\( E \) — Extra principal payment (USD)

Explanation: The formula calculates how the additional payment affects the amortization schedule, reducing the total number of payments needed.

3. Importance of Extra Principal Payments

Details: Making extra payments can significantly reduce the loan term and total interest paid, potentially saving thousands of dollars.

4. Using the Calculator

Tips: Enter the principal amount, interest rate (as decimal), regular monthly payment, and extra payment amount. All values must be > 0.

5. Frequently Asked Questions (FAQ)

Q1: How much can extra payments save me?
A: Even small extra payments can save significant interest and reduce your loan term by years.

Q2: Should I specify the extra payment is for principal?
A: Yes, always specify extra payments should go toward principal to maximize savings.

Q3: Is it better to make one large extra payment or smaller regular ones?
A: Regular smaller payments save more interest due to compounding effects.

Q4: How does this affect my amortization schedule?
A: Extra payments reduce principal faster, decreasing future interest calculations.

Q5: Can I calculate total interest savings with this?
A: This shows reduced payments; multiply by monthly payment to estimate total paid.