$40,000 after 3 years on a $650,000 loan
- Interest saved
- $138,717
- Time saved
- 3y 9m
- New payoff time
- 26y 3m
The interest saved is a large multiple of the payment itself. Twenty-seven remaining years of interest on the amount repaid is the reason.
Lump sum repayment calculator
A bonus, an inheritance, a tax refund. This works out what putting it against the mortgage is worth.
The answer depends heavily on when. The same lump sum is worth several times more in year three than in year twenty-three, because what it buys is the removal of interest for every year that remains.
Lump sum repayment calculator
Shows what a one-off extra repayment does to a home loan: the balance after it, the time saved and the interest avoided.
What to enter
Lump sum
The single extra payment, made once and not repeated.
After payments
How far into the loan the payment lands, counted in repayment periods. This is the input that matters most, and the one people leave at zero without thinking about it.
Reading the result
The interest saved is almost always a multiple of the lump sum itself on a long-dated loan. That is not a trick: money that stops being borrowed stops being charged interest, every period, for the rest of the term.
The time removed is the second effect. Because the scheduled repayment does not change, the whole of the reduced balance is cleared faster rather than the payment getting smaller.
Change the timing input and watch both numbers move. That sensitivity is the argument for making the payment when you have the money rather than saving it up to make a larger one later.
Worked examples
Every figure below is computed by the same calculator on this page, from the inputs described. Nothing here is typed in by hand, so an example cannot disagree with the tool.
The same $40,000 after 20 years
- Interest saved
- $29,416
- Time saved
- 1y 5m
- New payoff time
- 28y 7m
Identical payment, dramatically smaller saving. Run both and the case for acting early stops being an opinion.
How it is worked out
The loan is run forward at the scheduled repayment to the period you nominate. The lump sum is applied to the balance at that point, and the loan continues at the same repayment until the balance reaches zero.
The result is compared against the identical loan with no lump sum, so the difference isolates the effect of the payment and nothing else.
What it assumes
The repayment stays the same afterwards
The lump sum shortens the loan rather than reducing the payment. If your lender recalculates the minimum repayment downwards, the time saving is what you give up.
The payment is allowed in full
Fixed-rate loans commonly cap annual extra repayments. A lump sum above that cap attracts a break cost that this does not model.
Where it stops being right
An offset account may suit better
A balance in a full offset saves the same interest while remaining yours to withdraw. If there is any chance you will need the money back, compare the two before committing it to the loan.
Related calculators
Extra repayment calculator
Shows how paying more than the minimum each period shortens a home loan and cuts the interest paid.
Offset account calculator
Estimates what holding a balance in a full offset account saves in interest, and how much sooner the loan closes if repayments stay the same.
Home loan repayment calculator
Works out the regular repayment on a home loan, and what it adds up to in interest over the full term.
How long to repay calculator
Works out how long a loan takes to clear at a chosen repayment, and what it costs in interest along the way.
Putting this calculator on your own site
This calculator can be embedded on a business website, branded to match it, with a call to action that sends the enquiry to that business rather than collecting anything here.