How to compare overpayments
Test an extra amount against your current schedule.
1
Enter the loan
Use the outstanding balance, rate and remaining term.
2
Add an extra payment
Start with an amount you can sustain every month.
3
Check the saving
Compare the interest saved with the value of keeping that money liquid.
What does this tool do?
An extra payment goes directly to principal, so every future interest charge is calculated on a smaller balance. This calculator compares the scheduled payoff with the same loan plus an extra monthly amount.
The Formula
Base payment = P × r ÷ (1 − (1 + r)^−n); compare total interest with and without the extra paymentFrequently Asked Questions
Should I invest or overpay the mortgage?
Compare the after-tax mortgage rate with a realistic investment return and your need for liquidity. Overpaying is a guaranteed return equal to the interest rate you avoid.
Does the extra payment reduce the monthly payment?
Usually not. Most lenders keep the required payment the same and shorten the term. Some recast the loan; ask your lender.