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Loan Prepayment Calculator (Term Reduction / Payment Reduction)

Estimate the impact of prepaying a mortgage or other loan. Enter your loan terms plus when and how much you prepay to see the interest you save, the loan term you can shorten with term reduction, or the new monthly payment with payment reduction.

Input

Prepayment method

thousand
%
years
months in
thousand

Result

Interest saved by prepayment

$97,200.00

If you prepay $300,000.00 after 60 months using Term reduction

Time shortened

3 yr 10 mo

Total interest before prepayment

$556,767.00

Total interest after prepayment

$459,567.00

Change in number of payments

Without prepayment

30 yr left

With prepayment

26 yr 2 mo left

Original monthly payment

$8,469.00

Balance just before prepayment

$2,632,913.00

Balance after prepayment

$2,332,913.00

How it works

  • The monthly payment is derived from the equal-payment amortization formula (monthly payment = principal x monthly rate x (1 + monthly rate)^n / ((1 + monthly rate)^n - 1)) and rounded to the nearest currency unit. The monthly rate is the annual rate / 100 / 12.
  • Repayment is simulated month by month. Each month's interest = current balance x monthly rate (rounded), the principal portion = monthly payment - interest, and the prepayment amount is subtracted from the balance right after the regular payment in the month you specify.
  • Term reduction keeps the monthly payment unchanged and shortens the number of payments as the balance drops. The remaining payments and time saved are shown in years and months.
  • Payment reduction keeps the remaining number of payments unchanged and recalculates the monthly payment from the post-prepayment balance, lowering your monthly burden. The new monthly payment is shown.
  • Interest saved is the total interest without prepayment minus the total interest with prepayment. The prepayment amount itself (principal repaid) is not counted as interest.
  • Actual loans may differ due to prepayment fees, credit life insurance, rate revisions, and rounding. Treat these results as a rough estimate only.