# Mortgage Prepayment Calculator

URL: https://speedycalculator.com/calculators/finance/mortgage-prepayment/
Last updated: 2026-10-25

> The mortgage prepayment calculator shows the effect of regular prepayments and a lump-sum prepayment on your mortgage – the shorter term, interest saved and new payoff date – with US or Canadian compounding.

## Inputs

- Mortgage amount
- Interest rate (%)
- Loan term (years, months)
- Interest calculation method
- Periodic prepayment (monthly)
- Lump sum prepayment
- Month of lump sum

## Results

- Monthly payment
- Number of payments with prepayments
- New repayment term
- Total interest without prepayments
- Total interest with prepayments
- Interest saved

## Formula

```
Periodic rate i = (1 + r ÷ m)^(m ÷ 12) − 1 (m = 12 US, 2 Canada)
Balance after lump sum = balance at that month − lump sum
Remaining months = nper(i, payment + prepayment, balance)
```

## Explanation

Many Canadian mortgages allow prepayments of 10–20% of the original amount each year without penalty. Prepaying early has the biggest effect because it removes principal before most of the interest is charged.

### How to use the Mortgage Prepayment Calculator

- **Mortgage amount**
- **Interest rate**
- **Loan term**
- **Interest calculation method**
- **Periodic prepayment (monthly)**
- **Lump sum prepayment**
- **Month of lump sum**

Results update as you type, and every field accepts the units shown in its menu.

### How it works

Enter the mortgage amount, rate, term, interest calculation method, regular prepayment and any lump sum with the month it is paid.

### Tips

- Get a written loan estimate and compare the APR, not just the interest rate.
- Include property tax, insurance, HOA fees and maintenance in your monthly budget.
- A larger down payment lowers the payment and can remove mortgage insurance.
- Rates change daily – use a current quote for the most accurate result.

### Common mistakes to avoid

- Looking only at the monthly payment instead of the total cost of the loan.
- Forgetting closing costs and fees.
- Assuming home prices always rise.

### Inputs explained

FieldWhat to enterMortgage amountAmount in your currencyInterest rateIn %Loan termUnits: years, monthsInterest calculation methodChoose one: Monthly (US & UK), Semi-annually (Canada)Periodic prepayment (monthly)Amount in your currencyLump sum prepaymentAmount in your currencyMonth of lump sumA number

### What each result means

- **Monthly payment** = pmt([Monthly rate], [Loan term], [Mortgage amount])
- **New repayment term** = [Number of payments with prepayments]÷12
- **Total interest without prepayments** = [Monthly payment]×[Loan term] - [Mortgage amount]
- **Total interest with prepayments** = ([Monthly payment] + [Periodic prepayment (monthly)])×[Number of payments with prepayments] + [Lump sum prepayment] - [Mortgage amount]
- **Interest saved** = [Total interest without prepayments] - [Total interest with prepayments]

### Example values

How the main result changes when **Mortgage amount** changes and everything else stays at the example values above:

Mortgage amountInterest saved200,00078,481.05300,00090,993.71400,00098,887.66500,000104,331.62600,000108,316.25800,000113,762.19

## Worked example

Inputs — Mortgage amount: $400,000; Interest rate: 5.5 %; Loan term: 25 years; Interest calculation method: Semi-annually (Canada); Periodic prepayment (monthly): $250; Lump sum prepayment: $20,000; Month of lump sum: 24.

Results — Monthly payment = $2,441.57; Number of payments with prepayments = 228; New repayment term = 19 years; Total interest without prepayments = $332,469.78; Total interest with prepayments = $233,582.12; **Interest saved = $98,887.66**.

## FAQ

**What is a mortgage prepayment?**
Paying more than your scheduled payment to reduce principal.

**How much can I prepay without a penalty?**
In Canada, often 10–20% of the original amount a year; in the U.S. usually unlimited.

**Is a lump sum better than regular prepayments?**
The earlier the money goes in, the more interest it saves.

**What formula does the Mortgage Prepayment Calculator use?**
Periodic rate i = (1 + r ÷ m)^(m ÷ 12) − 1 (m = 12 US, 2 Canada).