See how extra mortgage payments reduce your loan term and save interest. Model one-time, monthly, or annual extra payments and compare to your original schedule.
Making extra payments on your mortgage is one of the most straightforward ways to pay off your home faster and save thousands in interest. Whether you add $100 a month, make an annual lump sum, or apply a one-time windfall, every extra dollar applied to principal accelerates your payoff date. The savings are especially dramatic early in the loan, when each payment is overwhelmingly interest and a small extra principal payment prevents years of compounding.
This calculator lets you model three types of extra payments — monthly, annual, and one-time — individually or combined. It re-amortizes your loan with the extra payments and shows you the new payoff date, total interest saved, and how much sooner you will be mortgage-free. You can test different combinations to find the strategy that fits your budget and goals.
Even small extra payments compound over time. An extra $200 per month on a $350,000 loan at 6.5% can save over $70,000 in interest and cut nearly 7 years off a 30-year mortgage.
Knowing that extra payments help is intuitive — but quantifying the exact savings is motivating. This calculator turns abstract advice ("pay extra on your mortgage") into concrete numbers: the exact payoff date, total dollars saved, and how each extra payment type contributes to your goal.
Use it to test different scenarios — what if you add $100/month? $500/month? A $10,000 lump sum? — and find the right strategy for your budget.
Standard amortization: M = P × [r(1+r)^n] / [(1+r)^n − 1] With extra payments, each period: Interest = Balance × r Principal = M − Interest + Extra Monthly + (Extra Annual / 12 amortized) New Balance = Balance − Principal The loan is re-amortized by iterating monthly until balance reaches zero. One-time payments reduce the balance immediately in the period they are applied.
Result: Pay off 7.2 years early | Save $89,400 in interest
A $300,000 balance at 6.5% with 28 years remaining has a monthly payment of about $2,028. Adding $200/month extra, $2,000 annually, and a $5,000 one-time payment reduces the term from 28 years to about 20.8 years and saves approximately $89,400 in total interest. The one-time payment alone saves about $12,000; the monthly extra saves about $65,000; the annual payment saves about $12,400.
Extra mortgage payments work through the same compounding principle that makes mortgages expensive — but in reverse. Every dollar of extra principal today prevents interest from accruing on that dollar for every remaining month of the loan. A $1,000 extra payment in Year 1 of a 30-year loan at 6.5% saves approximately $6,700 in interest over the remaining term.
The most effective approach combines all three types of extra payments: (1) a consistent monthly extra amount that fits your budget, (2) an annual lump sum from predictable windfalls like tax refunds or bonuses, and (3) occasional one-time payments from unexpected cash. Even if each individual contribution seems small, the three together create a powerful payoff acceleration.
Extra mortgage payments are not always the best use of cash. If you have high-interest debt (credit cards, personal loans), pay those first. If you lack an emergency fund (3-6 months of expenses), build that first. And if your mortgage rate is exceptionally low (below 4%), investing the extra cash may yield higher returns. The optimal strategy depends on your complete financial picture.
On a $300,000 loan at 6.5% for 30 years, an extra $100/month saves approximately $45,000 in interest and cuts about 4 years off the term. The savings increase with higher rates and longer remaining terms.
It depends on your interest rate. If your mortgage rate is above 5-6%, the guaranteed return from prepayment is compelling. Below 4%, investing may yield higher long-term returns. Consider your risk tolerance and the peace of mind that comes with being mortgage-free.
A lump sum applied early in the loan has the greatest impact because it prevents interest from compounding on that principal for the entire remaining term. Monthly extra payments provide steady, disciplined savings. Both are effective — ideally combine them.
Yes. Federal law prohibits prepayment penalties on FHA, VA, and USDA loans. You can make extra payments at any time without penalty. Just ensure your servicer applies them to principal.
When making extra payments online, look for a "principal only" or "additional principal" field. When mailing a check, write "apply to principal" on the memo line and include your loan number. Follow up to confirm it was applied correctly.
No — your required monthly payment stays the same. Extra payments reduce your principal balance, which shortens the loan term and reduces the total interest paid. The payment amount only changes if you formally refinance or recast the loan.
A recast is when your lender re-amortizes your loan after you make a large lump sum payment, resulting in a lower required monthly payment. Unlike refinancing, a recast keeps your current rate and term. Not all lenders offer this option, and there may be a small fee.
As early as possible. In the first years of a mortgage, most of your payment goes to interest. Extra payments early in the loan prevent years of interest accumulation and have the highest compound effect. But starting at any time is still beneficial.