- Extra payment
- Money paid on top of the required monthly payment and applied directly to principal. Because interest is charged on the remaining balance, each extra dollar lowers the interest on every later payment and shortens the payoff. This calculator assumes the same extra amount every month and that your servicer applies it to principal.
- Principal
- The amount borrowed, or the part of it still owed, not counting interest. Each regular payment is split between interest and principal, and only the principal portion lowers the balance. Extra payments go entirely to principal, which is why they cut total interest faster than the same amount paid as interest.
- Amortization
- Paying off a loan through equal periodic payments that cover interest first and then principal. Early in the schedule most of each payment is interest, so extra principal paid early has the largest effect. The calculator reruns the amortization schedule with your extra payment to find the new payoff date.
- Interest saved
- The difference between total interest on the standard schedule and total interest with the extra payment. It grows with a higher rate, a longer remaining term and a larger or earlier extra payment. The figure assumes the extra amount is paid every month until the loan is gone.
- Time saved
- How much sooner the loan is paid off with extra payments than on the standard schedule, shown in years and months. The required monthly payment does not change; the loan simply reaches a zero balance earlier because more principal is retired each month.
- Standard payment
- The required monthly principal and interest payment based on the loan amount, rate and term, before any extra. The new monthly payment shown by the calculator is this amount plus the extra payment. Taxes, insurance and PMI collected through escrow are not included.
- Prepayment penalty
- A fee some loans charge for paying off principal early, usually within the first years. If your loan has one, part of the savings shown here may be lost. The calculator assumes no penalty; your loan documents or servicer can confirm whether one applies.
- Interest rate
- The annual percentage the lender charges on the unpaid balance, not including fees. This calculator divides it by 12 to get the monthly rate. The higher the rate, the more interest each extra dollar of principal avoids, so extra payments save more on a higher-rate loan.
- Loan term
- The number of years over which the loan is scheduled to be repaid in equal monthly payments. With the rate, it sets the standard payment. Extra payments do not change the term on paper, but they end the loan before the term is up.
