## What happens when you prepay your mortgage?

Prepaying your mortgage triggers a cascade effect that speeds up the repayment of your loan. Think back to the interest payment formula above. Because your monthly interest payments are based on the outstanding balance on your loan, which is now lower due to the prepayment,…

## How does the mortgage prepayment calculator work?

This calculator will calculate the time and interest you will save if you prepay your mortgage by adding a prepayment amount to your current house payment.

## How does prepayment affect my monthly interest payments?

Because your monthly interest payments are based on the outstanding balance on your loan, which is now lower due to the prepayment, every future interest payment will be lower as well. Lower interest payments mean higher principal payments.

## How do you calculate interest and principal on a mortgage?

We can calculate each interest payment as: In our 30-year fixed rate mortgage example, interest payments are $1,667 on the first payment and only $8 on the last payment. The principal payment is simply the total monthly payment less the interest payment. Because the interest payment declines each month, the principal payment increases each month.