Loan Payoff Calculator
Making extra repayments on a loan or mortgage not only shortens the term, it also saves interest โ because you pay interest each month on a lower remaining balance. This calculator simulates both scenarios: with and without the extra repayment.
Result
6j 0mo
Time saved
- Interest saved
- ยฃ29,075.98
- New payoff time
- 228 months
How this was calculated
- 1Simulate the payoff without the extra amountยฃ1,033.71/mo = 300 months
- 2Simulate the payoff with the extra amountยฃ1,233.71/mo = 228 months
What the variables mean
- extra
- The amount you repay on top of your normal monthly payment
Worked examples
โฌ 200,000 remaining, 3.8% rate, 25 years, โฌ 200 extra per month
โ About 5 years and 8 months shorter, over โฌ 20,000 less interest.
Common mistakes
- Making extra repayments without checking whether your loan charges an early-repayment penalty.
- Using all your savings for extra repayment without keeping a buffer for emergencies.
Tips
- For a mortgage, interest is often tax-deductible; weigh that against the return you would forgo by investing instead.
Important to know
- Some loans only allow a limited amount of penalty-free extra repayment per year (often 10โ20% of the original principal).
When to use it
- Deciding whether extra mortgage repayments are worthwhile compared with saving or investing.
- Visualising the effect of putting an annual bonus toward the loan.
Frequently asked questions
Is extra repayment always the best choice?
Not necessarily. If your loan has a low rate and you could earn a higher expected return elsewhere (for example investing), that may be more attractive. It depends on your interest rate, risk tolerance and tax situation.
Was this calculator helpful?