How extra payments work on a farm loan
Interest is charged on the balance you still owe, so every extra pound that reduces the balance now stops all the interest it would have earned later. The regular payment stays the same, the loan ends sooner, and the last payment is whatever clears the balance. Because farm income comes in seasons, you can pay a lump sum each year with the last payment of the year, which is the harvest, instead of or as well as an extra amount with every payment.
Worked example: £150,000 and £200 a month
Take a £150,000 balance at 7% with 15 years left and monthly payments. The regular payment is £1,348.24 and the interest over the full 15 years would be £92,683.63. Paying an extra £200 a month for 144 payments, which is 12 years, cuts the interest to £71,672.71, so you save £21,010.92 and finish 36 months early. You pay £28,600 of extras in total and the final payment is £274.05.
A harvest lump sum, quarterly payments and a lump sum now
A yearly lump sum can do more than a small monthly extra. On £300,000 at 6.5% with 20 years left and monthly payments of £2,236.72, paying £15,000 with the last payment of each year clears the loan in 120 payments, ten years early, and saves £125,727.88 of interest.
Paying quarterly, £420,000 at 5.9% over 25 years has a regular payment of £8,058.61. An extra £1,500 each quarter saves £124,033.07 and takes 84 months off the loan. Combining a half-yearly extra of £2,000, a yearly lump sum of £5,000 and a lump sum of £25,000 now on £250,000 at 7.2% over 18 years saves £112,678.60 and leaves 19 half-yearly payments.
For the full cost of a farm loan, with fees and the APR, use the agri loan interest calculator.
Before you overpay
Check your agreement for an early repayment charge or a limit on overpayments, and whether extras shorten the term or lower the payment, because this calculator shortens the term. Keep enough cash for the quiet months of the farming year before you commit to a regular extra.
Use the right country page
This page stays in pounds. The country choices above the inputs open separate local pages. Choosing United States opens the US farm loan extra payment calculator, in dollars. The inputs reset and amounts are not converted.
Inputs for the farm loan extra payments calculator
Farm loan balance
What you owe now.
Interest rate and time left
The nominal yearly rate and the years left on the loan.
Payment frequency
How often you pay: monthly, quarterly, half-yearly or yearly.
Extra with every payment
An extra amount added to each regular payment.
Extra lump sum each year at harvest
Paid with the last payment of each year.
One-off lump sum now
Paid today, before the next payment.
CALCULATOR QUESTIONS
UK farm loan calculator with extra payments questions
How much does an extra £200 a month save on a farm loan?
On a £150,000 balance at 7% with 15 years left, it saves £21,010.92 of interest and 36 months.
Is a yearly harvest lump sum worth it?
It can be. £15,000 a year on a £300,000 loan at 6.5% over 20 years saves £125,727.88 and clears the loan ten years early.
Does the regular payment change?
No. This calculator keeps the payment the same and shortens the term, so the last payment is smaller.
Will my lender let me overpay?
That depends on your agreement. Some charge an early repayment charge or limit overpayments.
Does a lump sum now count as an extra?
Yes. It reduces the balance today and is included in the extra you pay in total.
What happens when I change country?
The United States option opens the separate US farm loan extra payment calculator, in dollars. Your inputs are reset rather than converted.