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Loan Prepayment Calculator (with Bonus Payments)

Estimate how much you save by prepaying a mortgage that uses bonus payments. The monthly and bonus portions are handled separately so you can compare the term-shortening and payment-reduction methods, including interest saved, time cut, and the new payment.

Input

Prepayment method

$
%
yrs
$

The principal repaid at bonus time (twice a year), out of the total loan. Enter 0 for no bonus payments.

mo. later
$

Result

Interest saved by prepayment

$973,737.00

Your monthly-payment term is shortened by about 3y 10m

Total interest before

$5,582,791.00

Total interest after

$4,609,054.00

Term shortened by

3y 10m

Breakdown (monthly portion / bonus portion)

Monthly portion (principal $24,000,000.00)

Interest before

$4,454,363.00

Interest after

$3,676,665.00

Interest saved

$777,698.00

Term shortened

3y 10m

Bonus portion (twice a year) (principal $6,000,000.00)

Interest before

$1,128,428.00

Interest after

$932,389.00

Interest saved

$196,039.00

Term shortened

3y 6m

How it works

  • The bonus-repayment portion is subtracted from the loan amount, and the remainder is treated as the monthly portion. The monthly and bonus portions are each calculated as independent fixed (equal-payment) loans. The bonus portion is treated as paid twice a year (every 6 months), using a semiannual rate derived by compounding the monthly rate over 6 months.
  • Each loan's payment is found with principal x rate x (1+rate)^n / ((1+rate)^n - 1). The monthly rate is the annual rate / 12, and the bonus portion's semiannual rate is (1+monthly rate)^6 - 1. Interest each period is the current balance times the rate (rounded to the nearest currency unit).
  • Up to the prepayment date, the balance is amortized with the original payment, then the prepayment amount is subtracted from the balance at that point. The prepayment is split between the monthly and bonus portions in proportion to their balances at the time of prepayment.
  • The shorten-term method keeps the same payment and re-amortizes the post-prepayment balance, saving the interest on the periods removed from the term.
  • The reduce-payment method keeps the same number of remaining payments and recalculates the payment from the post-prepayment balance, lowering each payment. The interest saved is generally smaller than with the shorten-term method.
  • Note: this tool is an approximation using a simplified model that treats the monthly and bonus portions independently. Real lenders calculate them together, and prepayment fees, rounding, and applicable rules differ, so confirm the official savings and payment with your lender.