Extra Payment Calculator

See how making extra mortgage payments can dramatically reduce your loan term and save thousands in interest. Compare the impact of additional monthly and annual payments.

Loan & Extra Payments

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%
yrs
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Additional amount paid each month

$

Lump sum applied once per year

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Enter your loan details and extra payment amounts, then click Calculate to see your savings.

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Pro Tip

Round up your monthly payment to the nearest $100 for an easy way to pay extra without noticing. Even an extra $50-100/month makes a significant difference over the life of your loan.

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How Extra Payments Accelerate Your Mortgage Payoff

Extra mortgage payments go directly toward reducing your principal balance. Since interest is calculated on the remaining balance each month, every dollar of extra principal paid today reduces the interest charged on all future payments. This creates a compounding savings effect.

In the early years of a mortgage, the majority of each payment goes toward interest. Making extra payments during this period is especially powerful because you redirect more money toward principal reduction when the balance is at its highest.

There are several strategies for making extra payments: adding a fixed amount each month, making one extra full payment per year, applying lump sums from bonuses or tax refunds, or switching to biweekly payments which naturally results in 13 full payments per year.

Before committing to extra mortgage payments, ensure you have an emergency fund, are maximizing employer retirement match, and have paid off high-interest debt. Your mortgage is likely your lowest-interest debt, so prioritize accordingly.

Extra Payment Formula

Amortization with Extra Payments

New Balance = Previous Balance × (1 + r) - (M + Extra)

Where:

r = Monthly interest rate (annual rate / 12)

M = Regular monthly payment amount

Extra = Additional monthly principal payment

Example

For a $300,000 loan at 6.5% with $200/month extra:

  • • Regular monthly payment: $1,896.20
  • • With extra: $2,096.20 effective payment
  • • Original payoff: 360 months (30 years)
  • • New payoff: ~276 months (~23 years)
  • • Interest saved: ~$74,000

Frequently Asked Questions

How much can I save by making extra mortgage payments?
Even small extra payments can save tens of thousands in interest. For example, adding $200/month to a $300,000 loan at 6.5% for 30 years saves approximately $74,000 in interest and pays off the loan about 7 years early.
Should I make extra payments or invest the money?
Compare your mortgage interest rate to your expected investment returns after taxes. If your mortgage rate is 6.5% and you expect 8% returns on investments, investing may be better. However, paying off your mortgage provides guaranteed savings and peace of mind.
Is it better to make extra monthly or annual payments?
Extra monthly payments are generally better because they reduce the balance sooner, meaning less interest accrues each month. However, any extra payment helps. Annual lump sums from bonuses or tax refunds are also effective.
Do I need to tell my lender about extra payments?
Yes, specify that extra payments should be applied to principal, not held for future payments. Most lenders allow you to designate extra principal on your payment stub or online portal. Check that your loan has no prepayment penalty.
Can I stop making extra payments if my finances change?
Absolutely. Extra payments are voluntary and you can stop or adjust them at any time. Your required minimum payment remains the same regardless of extra payments made.