This equation will calculate the total Cost to pay-off the loan when making an additional extra monthly payment.
This will do an Amortization and calculate the total amount of Payments to Payoff a loan. It will allow for evaluating the effects of an additional extra amount paid each month in addition to the monthly mortgage payment.
This equation can be used to answer questions of the form: What is the Total Cost of a loan if I add an extra $10 to the monthly mortgage payment?
A typical 30 year loan at 6% interest for $50,000 will have a total cost of around $107,920.80.
If you make an additional $55 payment each month, the total cost of the loan will only be $86,757.92, $21,162.88 less in the total cost of the loan.
The equation allows you to evaluate the savings of different payment strategies, such as by paying an additional dollar amount each month.