Promissory Note Mortgage Calculator Extra

Extra Payment Impact = Reduced Term or Interest

\[ \text{Savings} = \text{Total Interest Without Extra} - \text{Total Interest With Extra} \]

Loan Amount:

Interest Rate:

Loan Term:

years

Extra Payment:

$ per month

Regular Monthly Payment:

Total Interest Without Extra:

Total Interest With Extra:

Interest Saved:

Months Saved:

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1. What is Extra Payment Impact?

Extra payments on a promissory note mortgage can significantly reduce either the loan term or the total interest paid. This calculator shows how making additional payments affects your mortgage.

2. How Does the Calculator Work?

The calculator uses standard amortization formulas:

\[ \text{Monthly Payment} = P \times \frac{r(1+r)^n}{(1+r)^n-1} \]

Where:

$ P $ — Principal loan amount
$ r $ — Monthly interest rate (annual rate ÷ 12)
$ n $ — Total number of payments (term in years × 12)

Explanation: Extra payments are applied directly to the principal, reducing the outstanding balance faster and decreasing total interest.

3. Importance of Extra Payments

Details: Even small extra payments can save thousands in interest and shorten the loan term significantly. This is particularly powerful early in the loan term.

4. Using the Calculator

Tips: Enter the loan amount, interest rate, term in years, and optional extra payment amount. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How much can I save with extra payments?
A: Savings depend on loan size, rate, and extra amount. Even $50-100 extra per month can save thousands over the loan term.

Q2: Should I reduce term or interest?
A: Reducing term builds equity faster while reducing interest saves money overall. The calculator shows both impacts.

Q3: When do extra payments have most impact?
A: Early in the loan when more of each payment goes toward interest rather than principal.

Q4: Are there prepayment penalties?
A: Some loans have prepayment penalties - check your promissory note terms before making extra payments.

Q5: How do I specify extra payments?
A: Enter the additional amount you can pay each month beyond the required payment.