How it works
Enter your current principal balance, fixed rate and remaining term. The model first calculates the regular payment, then adds the same extra principal every month beginning with the next payment. Compare interest and repayment months with the unmodified loan.
Formula
Iₜ = Bₜ₋₁ × r; Pₜ = min(Bₜ₋₁, M + Extra principal each month − Iₜ); Bₜ = Bₜ₋₁ − Pₜ.
Worked example
For a 300,000 balance at 6% over 30 years, adding 200 each month saves about $91,173.43 in interest and repays the balance 81 months sooner in this model. The final payment is capped at the remaining amount owed.
Assumptions and limitations
Assumes extra payments go immediately to principal and the regular payment is not recast. No prepayment penalties, fees, holidays, irregular payments or changing rates are modeled. The base payment is recalculated from the entered remaining balance and term; it may differ from an existing contract.
Local rates and lending rules
Enter a lender’s nominal interest rate, not APR. This model divides it by 12 and assumes monthly payments. Fees, eligibility, compounding conventions and tax rules vary by country.
Sources and methodology
- CFPB — Principal, interest and total monthly payment
- CFPB — Understanding a Loan Estimate
- CFPB — Debt-to-income ratio
- CFPB — Compare loan offers
Sources checked 2026-10-26
Frequently asked questions
Can extra payments reduce my required monthly payment?
This model keeps the scheduled payment unchanged and shortens the term. A lender may offer recasting under different conditions; check your agreement before assuming that your required payment changes.
Amounts are illustrative. Not financial advice or a lender quote.