Mortgage Payoff Calculator: See Your Debt-Free Date

Every dollar of extra principal you pay today is a dollar you no longer owe interest on for the entire remaining life of the loan. Mortgage interest is charged each month on the outstanding balance, so reducing the balance earlier means the interest portion of every future payment shrinks.

On a 30-year, $300,000 mortgage at 6.5%, an extra $200/month can shorten the term by roughly 6 years and save $80,000+ in interest. The effect compounds most in the early years, when the balance — and therefore each month's interest charge — is highest. By year 25, an extra payment has much less impact, simply because the remaining balance is small.

Mathematically, it's a comparison between your mortgage rate (after the mortgage-interest tax deduction, if you itemize) and your expected after-tax investment return.

If your mortgage rate is 7% and you can reasonably expect 5% after-tax from a diversified portfolio, paying down the mortgage wins. If your mortgage is 3.5% and you expect 7%+ from long-term equities, investing usually wins on expected value — but the mortgage payoff is a guaranteed return, while market returns are not.

Many people split the difference: max retirement-account contributions first (for the tax advantage and any employer match), then apply remaining cash to extra principal. The psychological benefit of being mortgage-free in retirement also matters for many households, even when the spreadsheet says "invest instead."

Most U.S. residential mortgages originated after 2014 do not have prepayment penalties, thanks to Consumer Financial Protection Bureau (CFPB) Qualified Mortgage rules.

However, some non-QM loans, older mortgages, and certain commercial loans still include them — typically as a percentage of the prepaid balance during the first 3 to 5 years. Always check your promissory note or call your servicer before making a large lump-sum prepayment.

When you send extra money, also confirm with your servicer how it will be applied. Some servicers default to applying extra funds to the next month's payment (which doesn't save interest) instead of to principal. A note in the memo line like "apply to principal only" usually works, but confirm in writing.

A true biweekly payment plan splits your monthly payment in half and pays it every two weeks. Because there are 26 biweekly periods in a year, you end up making the equivalent of 13 monthly payments instead of 12 — one extra payment per year.

The equivalent monthly approach is to add one-twelfth of your monthly payment as extra principal each month. The interest savings are similar, but the monthly DIY method gives you more control: you can pause or change the amount any month, and you avoid any setup fees some servicers charge for biweekly plans.

Either approach beats the standard monthly schedule. To model biweekly in this calculator, enter (monthly payment ÷ 12) as your "extra principal each month".