Mortgage Prepayment

📖 Overview

You have spare cash. Should you pay down the mortgage early? The answer turns on one thing: whether that money, invested, would reliably beat your loan rate. This tool puts both prepayment structures side by side. Shortening the term keeps your monthly payment and cuts the number of years; reducing the payment keeps the term and lowers what you pay each month. It reports the interest saved under each, and shortening usually wins. Enter an expected investment return as well and the tool solves for the break-even point, the annualised return at which investing beats prepaying. It also shows your original and new monthly payment, the remaining principal and how many periods you have already paid, so you can weigh the decision against your own cash flow. Shortening the term almost always saves more interest, because it retires principal faster while the payment stays high, whereas reducing the payment leaves the schedule length untouched. The trade-off is cash flow: a shorter term locks up more of your monthly income, which matters if your income is uneven.

✨ Features

• Handles both equal-payment and equal-principal amortisation, each on its own formula period by period The schedule shows exactly which period the balance reaches zero under each option.
• Reports interest saved under term shortening and payment reduction together, so the two can be compared directly Interest already paid is reported too, so you can see the full cost of the loan so far.
• Solves the break-even investment return, the annualised rate at which investing beats prepaying An annual or monthly frequency can be selected to match how your lender compounds.
• Shows original and new monthly payment, remaining principal and periods already paid The break-even figure updates as you change the loan rate, showing how a cheap mortgage shifts the answer.
• Supports split loans, with the subsidised and commercial portions entered at their own rates and amounts Totals for each portion are shown separately and then combined.
• Prints a schedule comparison so payments and total interest before and after prepayment are visible row by row The comparison keeps the prepayment amount identical across both structures so the difference is purely structural.

🚀 How to use

1. Choose equal-payment or equal-principal amortisation
2. Enter the loan amount, annual rate and original term
3. Fill in the periods already paid and how much you plan to prepay now
4. If you want the comparison, enter an expected annualised investment return
5. Press Calculate to compare interest saved under both structures and read the break-even point

⚠️ Notes

• Savings are nominal: interest saved is discounted at your original rate over the remaining term, without adjusting for time value or inflation, and a discounted future saving is worth less than the same number today
• Penalties excluded: some banks charge a prepayment penalty or cap how often and how much you may pay, so confirm with your lender, and some lenders also require a minimum notice period
• Break-even is indicative: the comparison assumes a risk-free return, and real investments fluctuate, so the figure is not guaranteed, so compare it against a return you could actually earn with acceptable risk
• Split loans need separate entries: subsidised and commercial portions carry different rates, and combining them produces a wrong answer, and entering a blended rate will misstate both options
• Numbers only: a zero rate, zero term or prepayment exceeding the remaining principal raises a message instead of a result, and the tool refuses to produce a schedule until the inputs are consistent