For mortgage overpayments, should you enter the original loan or today’s balance?
An early-payoff comparison starts today. Use outstanding principal and the remaining term rather than the entire amount borrowed when the home was purchased.
Mortgage payoff calculator →Exclude cash flows that have already happened
Interest already paid is a historical cost; making an extra payment now does not automatically refund it. Compare future strategies from the same current balance so that differences in later interest and payoff timing have a meaningful basis. Mixing an original loan amount with a remaining term can greatly distort the estimate.
Work from an outstanding-balance example
Suppose the original borrowing was 200,000 and 40,000 of principal has already been repaid. The current balance is 160,000. An immediate additional principal payment of 10,000 leaves 150,000. At an assumed monthly rate of 0.5%, interest for the next full month falls from 800 to 750, a reduction of 50. The example isolates the next period’s effect rather than claiming a lifetime saving without a complete schedule.
Check timing and contractual handling
The illustration assumes that the payment immediately reduces principal for the whole following month. Daily accrual, processing dates, charges and penalties are excluded. Match the payoff tool’s extra-payment timing to the intended arrangement, and confirm whether the lender shortens the term or changes future payments. When settling the loan completely, obtain a dated lender quote rather than treating the model balance as the final transfer instruction.
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