Loan

Mortgage Prepayment Calculator · Shorten Term vs Reduce Payment

Enter your existing mortgage and a one-off extra payment to instantly compare the two mainstream plans — shorten the loan term or reduce the monthly payment — with new payment, remaining months, interest saved and months paid off early. Runs locally in your browser.

Overview

In any falling-rate cycle, the most common question is: should I prepay my mortgage, and by how much? This tool takes your original principal, rate, term, months already paid, and a one-off extra payment, then instantly compares two mainstream plans side by side — shorten the term (keep the payment) maximizes interest saved; reduce the payment (keep the term) eases monthly cashflow. Everything is computed locally.

How to use

Enter original principal, annual rate, term (years).
Enter months already paid (e.g. 24 if you've been paying for 2 years).
Enter the one-off prepayment amount.
The results panel shows both plans side by side so you can pick what matches your cashflow.

Formula

1) Equal-payment monthly: M = P·i·(1+i)^n / [(1+i)^n − 1]
2) Remaining principal after k periods: B_k = P·(1+i)^k − M·[(1+i)^k − 1]/i
3) After extra payment X: P' = B_k − X

Plan A (shorten term, keep payment):
  solve n' from M·[1−(1+i)^-n']/i = P'
  n' = −log(1 − P'·i/M) / log(1+i), ceil to integer months
  interest saved = original remaining interest − new remaining interest
  months paid early = (n−k) − n'

Plan B (reduce payment, keep term):
  remaining months still = (n−k)
  new M' = P'·i·(1+i)^(n−k) / [(1+i)^(n−k) − 1]
  interest saved = original remaining interest − M'·(n−k) + P'

Common scenarios

Scenario 1 · $1M / 3.1% / 30y, extra $100k after 2 years

Shorten-term plan pays off ~52 months earlier and saves ~$97k interest; reduce-payment plan drops monthly from $4,271 to ~$3,800 over the remaining 28 years.

Scenario 2 · Legacy high-rate loan (5.88% / 20y)

Higher rate and fewer months paid amplify the shorten-term advantage — often 30%+ more interest saved vs reduce-payment.

Scenario 3 · Year-end bonus pays off the balance

When the extra amount exceeds remaining principal, both plans collapse to zero remaining months and interest.

FAQ

Should I shorten the term or reduce the payment?

Mathematically shorten-term saves more interest. But pick reduce-payment if future cashflow is uncertain (new baby, job change). Pick shorten-term for max savings with stable income.

What about prepayment penalties?

This tool computes interest savings only, not prepayment penalties. Confirm with your lender's policy first — most Chinese banks waive fees after 1 year.

Is prepayment worth it after a rate cut?

After a rate cut, first check whether your loan rate already reprices (LPR-linked loans usually do). Interest savings from prepayment will be smaller at a lower base rate. Re-run with the new rate first.

Does this work for equal-principal loans?

Shipping for equal-payment only (covers 90%+ of Chinese mortgages). Equal-principal support is planned.

Is multiple / scheduled prepayment supported?

First version supports a one-off prepayment. Repeating / scheduled prepayment planner is on the roadmap.

Does this tool upload my loan data?

No. Everything runs locally in your browser; nothing is uploaded.