15 Year Mortgage Calculator Extra Payment

How to Use This Calculator

Using this calculator is simple. Follow these steps to get accurate results:

1. Enter your current mortgage balance in the "Loan Amount" field.
2. Input your current interest rate in the "Interest Rate" field.
3. Specify the loan term in years in the "Loan Term" field.
4. Enter the amount of your regular monthly payment in the "Monthly Payment" field.
5. Input the amount of your extra payment in the "Extra Payment" field.
6. Click the "Calculate" button to see the results.

The calculator will display your new loan term, total interest saved, and the impact of your extra payments on your mortgage.

How the Calculator Works

The calculator uses the following formula to determine the impact of extra payments on your mortgage:

Where:

• Original Loan Term is the original length of your mortgage in years.
• Extra Payment is the additional amount you pay each month.
• Monthly Payment is your regular monthly mortgage payment.
• New Loan Term is the reduced length of your mortgage with extra payments.
• Total Interest Saved is the amount of interest you save by making extra payments.

The calculator assumes that you make the same extra payment each month and that your interest rate remains constant.

Worked Example

Let's say you have a $200,000 mortgage with a 5% interest rate over 15 years. Your regular monthly payment is $1,389. If you make an extra $200 payment each month, here's how the calculator would work:

In this example, making an extra $200 payment each month reduces your loan term by about 8 months and saves you $1,800 in interest.

Benefits of Extra Payments

Making extra payments on your mortgage offers several benefits:

• Reduce Loan Term: Extra payments help you pay off your mortgage faster, freeing up your money for other expenses.
• Save on Interest: By paying more than the minimum each month, you reduce the total amount of interest you pay over the life of the loan.
• Build Equity: Extra payments increase your equity in the home, which can be beneficial if you decide to sell or refinance.
• Improve Financial Health: Paying off your mortgage early can improve your credit score and reduce your overall debt.

However, it's important to consider your financial situation before making extra payments. Ensure that you can afford the additional payments without straining your budget.

Extra Payment Strategies

There are several strategies you can use to make extra payments on your mortgage:

1. Biweekly Payments: Instead of making monthly payments, pay every two weeks. This approach effectively gives you 26 payments per year instead of 12, which can significantly reduce your loan term.
2. Lump Sum Payments: Make a one-time extra payment, such as at the end of the year or when you receive a tax refund. This can help you pay off your mortgage faster.
3. Increase Monthly Payments: If possible, increase your regular monthly payment by a fixed amount each year. This strategy can help you pay off your mortgage more quickly.
4. Refinance: Consider refinancing your mortgage to a lower interest rate. This can reduce your monthly payments and save you money in the long run.

Each strategy has its own advantages and disadvantages, so it's important to choose the one that best fits your financial situation.