Mortgage Payoff Calculator

See how much you could save with early payoff

John Waggoner and Aly J. Yale,

Updated April 20, 2026

AARP

Updated April 20, 2026

How much interest can you save by increasing your mortgage payment? The mortgage payoff calculator helps you find out. Click the "View Report" button to see a complete amortization payment schedule and how much you can save on your mortgage.

Change the information currently provided in the calculator to match your personal information and view your results.

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Information and interactive calculators are made available to you as self-help tools for your independent use and are not intended to provide investment advice. We cannot and do not guarantee their applicability or accuracy in regards to your individual circumstances. All examples are hypothetical and are for illustrative purposes. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.

How does the mortgage payment calculator work?

A house is a large investment, and your mortgage is likely your biggest debt. Ideally, you’d get rid of that debt as quickly as possible and build up valuable equity in your home. The AARP mortgage calculator can help you do just that.

At some point during your mortgage closing, you sign a statement saying that you understand the amount of money you’ll be paying to the bank over time. Let’s say you borrow $325,000 for your home at 6 percent. (You can get current rates from mortgage purchaser Freddie Mac.) Over the course of 30 years, you’d pay your lender $325,000 in principal plus another $376,473 in interest, for a total of $701,473. That’s a lot of money.

Mortgage interest is amortized, so you pay the bulk of your interest in the first years of your loan term. If you start paying additional money toward your principal, you’ll save a lot of money in interest over the life of the loan.

If you’re thinking of refinancing your mortgage or getting a new mortgage altogether, the calculator can help you with that too. For example, the principal and interest for a $325,000 loan at 6 percent would be $1,949 per month. If you decided on a 15-year mortgage at 5.4 percent instead? Your monthly payment would rise to $2,638, but you’d pay $226,578 less in interest when compared to the 30-year mortgage discussed above. (Interest rates on 15-year mortgages are nearly always lower than those on 30-year mortgages.)

Mortgage Payoff FAQs

Let’s take another look at that 30-year $325,000 loan as an example. Your principal and interest payment would be $1,949 a month. If you started paying $100 more a month in the fifth year of that loan, or $2,049 total per month, you’d save $34,184 in interest and shorten your loan’s payoff by two years and seven months.

Paying down your mortgage early would also increase your home equity, which is the value of your home minus the debt you owe. It’s your stake in the property.

Having more home equity has several advantages. For one, most banks require mortgage insurance if you have less than 20 percent equity in the residence. In general, mortgage insurance costs about 0.5 to 1.5 percent of the loan amount per year, which you’ll typically pay monthly as part of your mortgage payment or in monthly installments. So, for a $325,000 loan, mortgage insurance would cost an extra $135 to $406 per month.

Mortgage insurance covers the bank in case you default; it has no payoff value to you. The sooner you get to 20 percent equity, the sooner you can get rid of your mortgage insurance and be free of paying the premium. Once you have removed mortgage insurance from your loan, you could opt to continue making your same payment, as this could accelerate your loan’s payoff and reduce your long-term interest costs.

Another advantage to paying down your mortgage more quickly: As you build up home equity, you get the ability to tap that equity and turn it into cash in an emergency or if you need to pay for repairs or renovations. Use home equity loans carefully, though: If you don’t make payments on time, you could lose your house to foreclosure.

Most loans allow you to prepay principal, but it’s wise to check that your bank has credited it toward the principal balance, rather than your interest costs. Be sure to mark your extra payment as “principal” when you submit it, and ask your lender for any additional instructions to ensure it goes toward the principal.

And don’t forget: When you reach 20 percent equity in your home, ask your lender to remove the mortgage insurance premium. If you forget, it will fall off automatically when you hit 22 percent equity.

John Waggoner was AARP's money editor from 2019 to 2024, covering everything from budgeting and taxes to retirement planning and Social Security. He was previously a reporter for Kiplinger's Personal Finance and  USA Today and has written books on investing and the 2008 financial crisis. Waggoner's  USA Today investing column ran in dozens of newspapers for 25 years.

Aly J. Yale is a freelance writer with extensive experience covering personal finance and real estate topics. Her work has been published by Newsweek, Money, Yahoo Finance, Fortune, Insider, US News and World Report, and Buyside from Wall Street Journal.