Purpose and steps
The calculator first finds the scheduled payment with the standard fixed-rate amortization formula. Monthly, annual, and one-time extras are then applied to principal, and interest is recalculated each period until the balance reaches zero. Property tax, homeowners insurance, PMI, fees, and adjustable-rate changes are excluded.
- Confirm currency and monthly versus annual amounts. U.S. tax and loan models should be used within their stated scope.
- Prepare Current loan balance, Annual interest rate, Remaining term, Next payment month, Extra each month, One-time extra payment, Apply after payment, Extra each year, Annual payment month, Annual increase to monthly extra, Alternative investment return. Defaults demonstrate the model rather than your personal circumstances.
- Check the headline result and its components. A key interpretation for this tool is: Interest saved compares total scheduled interest with the extra-payment path.
- Compare the baseline with a changed scenario: Time saved assumes the lender applies every extra amount directly to principal without lowering the scheduled payment.
Input reference and units
These values reproduce the model’s demonstration. Replace them with your own records or measurements; they are not recommended targets.
On a small screen, swipe the table horizontally to see all columns.
| Parameter | Demonstration value | How to enter it |
|---|---|---|
| Current loan balance | 300000 USD | Use dollars and the monthly or annual period stated in the field label; do not enter thousands of dollars. |
| Annual interest rate | 6.5 % | Enter a percentage such as 6.5, not 0.065. The equation converts it to a decimal. |
| Remaining term | 30 years | Use years here. The model converts to months when the payment schedule requires it. |
| Next payment month | 2026-10 | A fixed demonstration month; the live tool defaults to the next payment month. |
| Extra each month | 200 USD | Use dollars and the monthly or annual period stated in the field label; do not enter thousands of dollars. |
| One-time extra payment | 5000 USD | Use dollars and the monthly or annual period stated in the field label; do not enter thousands of dollars. |
| Apply after payment | 12 months | Use months, not years. Five years means 60 months. |
| Extra each year | 0 USD | Use dollars and the monthly or annual period stated in the field label; do not enter thousands of dollars. |
| Annual payment month | 1 months | Enter a calendar month from 1 to 12, not a payment number. |
| Annual increase to monthly extra | 0 % | Enter a percentage such as 6.5, not 0.065. The equation converts it to a decimal. |
| Alternative investment return | 0 % | Enter a percentage such as 6.5, not 0.065. The equation converts it to a decimal. |
Model-specific method
How this calculator produces its result
Scheduled payment: M = P × r(1 + r)ⁿ ÷ ((1 + r)ⁿ − 1). Each month, interest is balance × r; the scheduled principal and any extra payment reduce the balance before the next month.
Annuities and the remaining-balance recurrence
A fixed-payment loan is an annuity: the discounted value of all future payments equals the amount borrowed today. Summing that geometric series gives the monthly-payment equation. Match the rate and time unit: monthly payments use an annual nominal rate divided by twelve and a term counted in months.
Each payment is split into interest and principal. Interest uses the opening balance, so paying extra principal now reduces later interest. A zero rate must use P/n rather than the formula’s zero-over-zero form. Keep full precision during the schedule and round only for display; a lender may round each actual posting differently.
P = Σ[t=1…n] M/(1+r)^t M = Pr / (1 − (1+r)^−n) Iₜ = Bₜ₋₁r; Bₜ = Bₜ₋₁ + Iₜ − paymentₜ
- P: principal today
- r: rate per payment period, not the annual percentage
- n: number of payment periods
- M: scheduled payment; B: remaining balance
Worked example
A $320,000 balance at 6.5% with 30 years remaining has a scheduled principal-and-interest payment of about $2,023. Adding $250 every month pays the loan off about 7 years 9 months sooner and saves roughly $123,000 in interest.
Reading results without overstating them
- Interest saved compares total scheduled interest with the extra-payment path.
- Time saved assumes the lender applies every extra amount directly to principal without lowering the scheduled payment.
Assumptions and exclusions
- Confirm how your servicer applies extra payments and whether the loan has a prepayment penalty.
- Taxes, insurance, PMI, escrow changes, lender fees, refinancing, and adjustable rates are outside this model.
Sources and content notes
Toolify describes the implemented algorithm and its assumptions. Sources below support the topic or applicable rules; they do not endorse this calculator. Examples are illustrative, and published rules take precedence over simplified estimates.
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