1. What is a Mortgage Calculator With Lump Payment?

Definition: This calculator determines how a lump sum payment affects your mortgage term by calculating the new remaining term after the payment.

Purpose: It helps homeowners understand how extra payments can shorten their mortgage duration and save on interest.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• New Term — Remaining loan term in months
• Balance — Current loan balance ($)
• Lump — Lump sum payment ($)
• r — Monthly interest rate (decimal)
• EMI — Equal monthly installment ($)

Explanation: The formula calculates how many months it will take to pay off the reduced principal (after lump payment) at the current payment amount.

3. Importance of Lump Payment Calculation

Details: Making lump payments can significantly reduce your loan term and total interest paid, helping you become debt-free faster.

4. Using the Calculator

Tips: Enter your current loan balance, lump payment amount, monthly interest rate (divide APR by 12), and your regular monthly payment.

5. Frequently Asked Questions (FAQ)

Q1: How does a lump payment affect my mortgage?
A: A lump payment reduces your principal, which decreases both your remaining term and total interest paid.

Q2: What's a typical monthly interest rate?
A: For a 6% APR mortgage, the monthly rate would be 0.06/12 = 0.005 (default value).

Q3: Should I make lump payments or increase monthly payments?
A: Both strategies help, but lump payments provide an immediate principal reduction.

Q4: Does this calculator account for escrow payments?
A: No, use only your principal + interest payment (P&I) amount.

Q5: Why does my lender show a different term after lump payment?
A: Lenders may recalculate payments rather than term. This calculator keeps payments constant and reduces term.