Want to Pay Off Your Mortgage Fast? This Free Calculator Will Help

Whether you are buying a new home or refinancing an existing home loan, a mortgage amortization calculator can be essential. This tool can help you plan for housing costs by splitting your total mortgage into predetermined installments and accounting for both principal and interest.

After entering the loan value, interest rate, and term length, the calculator can tell you what monthly payments you’ll need to make to pay off the entirety of the loan. You can also see the breakdown of monthly costs to better understand how payments are allocated to your interest and remaining loan balance.

Disclaimer: The information provided in this article is for informational purposes only. It is not intended as legal, financial, investment, or tax advice, and should not be relied upon as such. Consult a licensed financial advisor or tax professional regarding your personal financial situation before making any decisions.

What is a mortgage amortization calculator?

Mortgage amortization refers to how you break up loan payments to repay your home mortgage. There are two components to the balance of a home loan: the principal, or original borrowed amount, and the interest, which grows over time.

Initially, most of your monthly payments go toward interest. As the loan matures, allocation flips, and more of the payment goes toward the principal.

A mortgage amortization calculator tells you what percentage of each payment goes to paying down the principal vs. interest.

This matters for a handful of reasons: First, you get a detailed insight into the breakdown of your loan costs.

Second, it creates a roadmap for building home equity, which affects things like mortgage insurance.

Lastly, the calculator provides a rough timeline of paying off the loan, which you can use to plan your finances long-term.

More specifically, using a mortgage amortization calculator, you can:

• Figure out how much interest you’ll pay over the loan term
• Determine your loan balance from month to month
• Learn what portion of monthly payments goes to interest and how much goes to the principal
• Compare the long-term costs of fixed-rate mortgages with different terms (e.g., 30-year vs. 15-year mortgage)
• Evaluate the impact that extra mortgage payments can have on your loan timelines
• Assess the average monthly cost of refinancing an existing loan

By using our mortgage income calculator and amortization calculator, you can figure out how much house you can afford and what your monthly payments would look like.

How to use the calculator step-by-step

Here are the five simple steps you can follow to use the calculator.

1. Enter the loan amount

The loan amount, or principal, refers to the original amount borrowed. The principal is used to calculate interest costs on a monthly basis, depending on the interest rate.

2. Enter the interest rate

The interest rate determines how much the loan balance grows each month. The higher the interest rate, the more interest you’ll pay over the loan term. You can think of the interest rate as the “cost” of borrowing money.

3. Enter the loan term

The loan term is the length of the loan and determines how many monthly payments you’ll make.

For example, a typical 30-year loan has a total of 360 payments (12 months x 30 years). Longer terms mean lower monthly payments as the debt is spread out, but you’ll also pay more interest in the long term.

4. Enter the start date

The start date is the day you make your first mortgage payment.

Generally, you start paying your mortgage on the first day of the second month after closing. So if you closed on June 20, your start date would be August 1.

5. Add extra payments (optional)

You can also input extra mortgage payments to see how making more payments will impact your amortization schedule and loan payoff date.

Once you input the fields, you’ll get some primary outputs:

• Monthly payments: This is the amount you pay each month. With a fixed-rate mortgage, your monthly payments stay the same.
• Amortization schedule: The schedule lists your monthly payments and tells you how much interest and loan balance the payment for that month covers.
• Payoff date: This is the date you make your last payment and fully pay off the loan principal. You can get a closer payoff date by making extra mortgage payments.
• Total interest: This is the total amount of interest you pay over the loan term.

What the amortization schedule shows and why it matters

The primary output of the mortgage calculator amortization is the schedule. The schedule shows you the monthly breakdown of your payments, how much is allocated to paying interest/the principal, and the remaining loan balance.

Let’s take a look at an example schedule to see the cost breakdown of the loan. The table below is a snippet of an amortization schedule for a 30-year $350,000 loan at a 6% interest rate.

There are two primary points to notice: First, the principal and interest paid always add up to $2,098, which is your monthly payment.

Second, the loan balance decreases according to the principal paid each month. You pay more interest at first, but then start paying more of the principal about halfway through the term.

Mortgage calculator amortization schedules are useful for financial planning, as they give you a consistent schedule of payments and outline how you build equity in the home. Due to how the amortization schedule works, equity accrual ramps up after about 5 to 10 years.

You can also compare schedules from mortgages with different terms — e.g., 30-year vs. 15-year mortgages. Comparisons provide insight into which mortgage you can afford and which would be best for your long-term horizons.

Extra payments and how they change your amortization

If you want to shorten your amortization schedule and pay off the loan faster, you can make extra payments.

These extra payments can be put to lowering the loan principal, ultimately allowing you to pay the full balance faster than if you only made the minimum monthly payment.

Say that you have an extra $500 each month that you want to put toward your mortgage. The extra contribution would reduce your loan principal by an additional $500, on top of the principal allocation from the monthly payment.

Depending on the size of the extra contribution, it could help you pay off your loan months or even years earlier than the minimum payment would allow. You can make these additional contributions as annual, monthly, or one-time payments.

If you want to make additional contributions, the following considerations can help you maximize their effectiveness:

• Beginning vs. end: The best time to make extra principal payments is at the beginning of the loan. Interest is cumulative and based on the principal, so reducing the principal early ultimately lowers the amount of interest you’ll have to pay.
• Monthly vs. yearly: Spreading extra payments out over months is usually better than making an additional lump payment at the end of the year. The sooner the additional payments are applied to the loan balance, the lower the interest expenses will be.
• One-time windfalls: It can also be a good idea to apply any one-time windfalls, such as tax returns, gifts, overtime pay, work bonuses, or inheritance, to the loan principal.

To put things into perspective, in our previous example of a $350,000 loan at 6%, an additional $200 monthly contribution can help you pay off your loan balance nearly six years earlier.

Common calculator scenarios and "what-ifs"

You can use our mortgage amortization calculator to evaluate a wide range of scenarios and compare loan terms and payoff strategies.

30-year vs. 15-year mortgage

Say you are choosing between a 15-year and a 30-year fixed-rate mortgage.

The calculator can tell you the differences between monthly payment amounts, total interest, and payment dates. 15-year mortgages have higher monthly payments, but you pay less interest and pay off the loan faster.

Conversely, 30-year loans have lower monthly payments but more interest and a later payoff date.

High vs. low interest rate

For two loans with different interest rates, the calculator can tell you how interest rates affect the total cost of the loan.

Strategies like making a larger down payment or buying mortgage discount points can lower your interest rate and reduce the total amount of interest you’ll pay.

Biweekly payments and other payoff strategies

A mortgage calculator can help you see the impact of extra mortgage payments and how they impact the payoff date.

You can see how extra payments help you pay off the loan faster and find an amount that still allows you to stay on budget.

Refinancing scenarios

For refinancing scenarios, the mortgage calculator can help you find savings.

The calculator tells you the difference in monthly payments and how switching to a new loan could reduce interest amounts and shorten payoff timelines.

Limitations and caveats of amortization calculators

Amortization mortgage calculators are a useful tool for estimating mortgage payments, but they aren’t foolproof and may not be suitable for all circumstances.

Below are some relevant limitations to typical mortgage amortization calculators to keep in mind.

Fixed vs. adjustable-rate mortgages

The calculator only works for fixed mortgages, where the interest rate remains constant. With an adjustable-rate mortgage, interest rates can vary based on numerous conditions.

Changing rates make it challenging to estimate payments as the total interest can fluctuate unpredictably.

Other fees not included

Mortgage amortization schedules only concern payments that cover the principal and interest. They don’t account for other fees and housing costs, such as taxes, homeowners' insurance, private mortgage insurance, or HOA fees. As such, the calculator might not fully represent the extended cost of your loan over its entire term.

Prepayment penalties

You may face a prepayment penalty if you pay off your mortgage balance before the term expires. This penalty exists to compensate the lender for any interest they would have earned if you had not paid off the loan early.

This is a reminder to always consult a financial professional before making significant decisions regarding real estate and mortgages.

Next steps

Now that you understand the basics of amortization and how to use the mortgage amortization calculator, it’s time to take the next steps.

Try playing with the calculator inputs to see how different values change the amortization schedule and the total amount paid over the loan term.

You can also see how extra mortgage payments can impact the amortization schedule and help you pay off your loan faster.

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