Mortgage Payoff Calculator

Author: Jon Kollman

Published on: 6/4/2025|5 min read

Fact Checked

Author: Jon Kollman|Published on: 6/4/2025|5 min read

Fact Checked

The thought of sailing through life with no mortgage payment is an appealing one. But to get there, you need to know how to calculate a mortgage payoff. Once you know your payoff amount, you can decide on the best strategy for paying off your mortgage early. That might mean making bigger payments, more frequent payments, or even refinancing to a shorter term. Using a mortgage payoff calculator can help you reach your goal of being mortgage-free faster.

Why you might want to pay your mortgage off sooner

Most people choose a mortgage that works for their budget, with payments that are affordable based on their income and other obligations. Taking extra measures to pay a mortgage off sooner can offer multiple benefits, such as:

Get out of debt faster: The most obvious advantage of paying off your mortgage quickly is that you'll no longer have a large debt hanging over your head.
Pay less in interest: Compressing your payoff timeline usually saves money in interest, too. That's because speeding up your repayment means you pay off principal sooner, leaving less for the lender to charge interest on.
Free up cash for other priorities: Once your home is paid off, the money you were paying toward your mortgage is now yours to do what you like with. You can save it, spend it, or invest it -- whatever gets you closer to your dreams.
Leverage your equity when needed: Paying off a mortgage also means you have full equity in your home. If you need to, you can borrow against that equity with a loan or line of credit.

How to calculate an early mortgage payoff

Paying off your mortgage early is an exciting goal, but it takes some planning to figure out how much your payments should be. Here's how to calculate an early mortgage payoff.

1. Understand your loan details

First, you'll need up-to-date loan information to get accurate results from a mortgage payoff calculator. Check your loan documents or log in to your lender's online dashboard to find the following:

Original loan amount: This is how much you borrowed when you took out your mortgage.
Original loan term: This is the length of your mortgage repayment period. If it's a fixed-rate mortgage, it's probably 10, 15, 20, or 30 years. Adjustable-rate mortgages are often 5, 7, or 10 years.
Time remaining on your loan: You've probably been making payments for a while. How many years do you have left to pay?
Outstanding loan balance: This is the amount that remains to be paid off, including interest.
Interest rate: The mortgage rate you received when you took out the loan (or the current rate for ARMs).
When you would like to be mortgage-free: For example, if you'd like to pay off your mortgage within 10 years, enter the number 10.

Once you have these figures, you can use our mortgage payoff calculator to determine how much money you could save on interest or how much extra you should pay each month to reach your goal. You can compare these results with your original monthly payment amount and interest owed.

2. Determine your payoff strategy

Once you understand what's left to pay on your mortgage and how much you could save, there are a few different strategies you can use:

Biweekly payments: If you pay one half of your mortgage payment every two weeks, you'll make 26 half-payments -- or 13 whole payments -- in one year. That's one extra payment each year compared to paying monthly.
Larger monthly payments: Another option is to increase the size of the payment you make each month. A mortgage payoff calculator can help you figure out how much to add to your payments to reach your goals.
Lump sum payment: If you can't commit to regular payments, consider making an occasional lump sum payment when you have extra cash, such as from a tax refund. It'll still shave money off your principal, reducing your interest and speeding up your payment timeline.
Refinance: Refinancing to a shorter term is another common way to pay your mortgage off faster. Refinancing replaces your existing mortgage with a new one, with a new interest rate, repayment terms, and end date. Your monthly payments may be larger, since you're compressing your timeline, but you can drastically reduce the time it takes to be debt-free.

Example scenario of an early mortgage payoff

Let's say you have a 30-year, fixed-rate mortgage with a 4.5% interest rate. The original loan amount is $350,000, with monthly payments of $1,773.40. You've been making payments for three years, so you have 27 years left.

Entering these details into a mortgage payoff calculator, you can see how much extra payments could save you. For instance, say you added $300 to each monthly payment: you could save almost seven years and more than $65,000 in interest.

Mortgage details Original Early payoff Monthly pay $1,773.40 $2,073.40 Total payments (principal and interest) $638,423.49 $572,737.74 Payoff in 27 yrs 20 yrs, 6 mos

Should you pay off your mortgage early?

Deciding whether to pay off your mortgage early depends on your budget and your priorities. It can feel great to be debt-free -- but will you miss having that cash flow for other needs? If the peace of mind is worth it to you, and you can afford to speed up your repayment timeline, then an early payoff could make sense.

It helps to run some numbers to see how different strategies could affect your bottom line. Now that you know how to calculate a mortgage payoff, you can play around with different options that will work with your budget. Use AmeriSave's mortgage resources and AI tools to learn how to save on your mortgage.

Frequently Asked Questions

Most people use a mortgage payoff calculator because the formula can be a little confusing:

B = L [(1 + c)^n – (1 + c)^p] / [(1 + c)^n (- 1)]

In this formula, B is your balance due, L is the total loan amount, c is the annual mortgage interest rate divided by 12 (to find the monthly rate), n is the number of mortgage payments, and p is the number of payments made so far.

If you save money on interest and can afford to make larger payments, it could be worth it to pay off your mortgage early. To know for sure, run the numbers through a calculator to see how much you could save. Keep in mind that committing to higher mortgage payments means that cash is tied up in your home, so if liquidity is important to you, you may not want to accelerate your mortgage payoff.

Overview
Why you might want to pay your mortgage off sooner
How to calculate an early mortgage payoff
Example scenario of an early mortgage payoff
Should you pay off your mortgage early?
FAQ

A mortgage is usually structured so that you pay it off in a certain amount of time -- like 15 or 30 years. But you can pay it off faster if you want. Paying a mortgage off early often saves you money on interest, though it will take a little more cash upfront than if you just followed your lender's payment schedule. Why you might want to pay your mortgage off sooner Most people choose a mortgage that works for their budget, with payments that are affordable based on their income and other obligations. Taking extra measures to pay a mortgage off sooner can offer multiple benefits, such as: Get out of debt faster: The most obvious advantage of paying off your mortgage quickly is that you'll no longer have a large debt hanging over your head. Pay less in interest: Compressing your payoff timeline usually saves money in interest, too. That's because speeding up your repayment means you pay off principal sooner, leaving less for the lender to charge interest on. Free up cash for other priorities: Once your home is paid off, the money you were paying toward your mortgage is now yours to do what you like with. You can save it, spend it, or invest it -- whatever gets you closer to your dreams. Leverage your equity when needed: Paying off a mortgage also means you have full equity in your home. If you need to, you can borrow against that equity with a loan or line of credit. How to calculate an early mortgage payoff Paying off your mortgage early is an exciting goal, but it takes some planning to figure out how much your payments should be. Here's how to calculate an early mortgage payoff. 1. Understand your loan details First, you'll need up-to-date loan information to get accurate results from a mortgage payoff calculator. Check your loan documents or log in to your lender's online dashboard to find the following: Original loan amount: This is how much you borrowed when you took out your mortgage. Original loan term: This is the length of your mortgage repayment period. If it's a fixed-rate mortgage, it's probably 10, 15, 20, or 30 years. Adjustable-rate mortgages are often 5, 7, or 10 years. Time remaining on your loan: You've probably been making payments for a while. How many years do you have left to pay? Outstanding loan balance: This is the amount that remains to be paid off, including interest. Interest rate: The mortgage rate you received when you took out the loan (or the current rate for ARMs). When you would like to be mortgage-free: For example, if you'd like to pay off your mortgage within 10 years, enter the number 10. Once you have these figures, you can use our mortgage payoff calculator to determine how much money you could save on interest or how much extra you should pay each month to reach your goal. You can compare these results with your original monthly payment amount and interest owed. 2. Determine your payoff strategy Once you understand what's left to pay on your mortgage and how much you could save, there are a few different strategies you can use: Biweekly payments: If you pay one half of your mortgage payment every two weeks, you'll make 26 half-payments -- or 13 whole payments -- in one year. That's one extra payment each year compared to paying monthly. Larger monthly payments: Another option is to increase the size of the payment you make each month. A mortgage payoff calculator can help you figure out how much to add to your payments to reach your goals. Lump sum payment: If you can't commit to regular payments, consider making an occasional lump sum payment when you have extra cash, such as from a tax refund. It'll still shave money off your principal, reducing your interest and speeding up your payment timeline. Refinance: Refinancing to a shorter term is another common way to pay your mortgage off faster. Refinancing replaces your existing mortgage with a new one, with a new interest rate, repayment terms, and end date. Your monthly payments may be larger, since you're compressing your timeline, but you can drastically reduce the time it takes to be debt-free. Example scenario of an early mortgage payoff Let's say you have a 30-year, fixed-rate mortgage with a 4.5% interest rate. The original loan amount is $350,000, with monthly payments of $1,773.40. You've been making payments for three years, so you have 27 years left. Entering these details into a mortgage payoff calculator, you can see how much extra payments could save you. For instance, say you added $300 to each monthly payment: you could save almost seven years and more than $65,000 in interest. Mortgage details Original Early payoff Monthly pay $1,773.40 $2,073.40 Total payments (principal and interest) $638,423.49 $572,737.74 Payoff in 27 yrs 20 yrs, 6 mos Should you pay off your mortgage early? Deciding whether to pay off your mortgage early depends on your budget and your priorities. It can feel great to be debt-free -- but will you miss having that cash flow for other needs? If the peace of mind is worth it to you, and you can afford to speed up your repayment timeline, then an early payoff could make sense. It helps to run some numbers to see how different strategies could affect your bottom line. Now that you know how to calculate a mortgage payoff, you can play around with different options that will work with your budget. Use AmeriSave's mortgage resources and AI tools to learn how to save on your mortgage.