Mortgage Extra Payment Calculator
This calculator shows what happens when you pay more than your required mortgage payment each month: how much interest you save, how many years earlier you are mortgage-free, and your new payoff date. On a typical loan, a modest extra payment saves tens of thousands in interest.
Enter your current remaining balance, your interest rate and the years left on the loan. The calculator works out your required payment, then simulates the loan with your extra amount added every month.
Why extra payments punch above their weight
Your required payment comes from the standard amortization formula:
Payment = B × r ÷ (1 − (1 + r)−n)
B is the balance, r the monthly rate and n the months remaining. Each month, interest is charged on the outstanding balance first, and only the rest of your payment reduces principal. An extra payment skips the queue: 100% of it hits principal. That shrinks every future month's interest, so more of every future payment also hits principal. The effect compounds in your favor for the rest of the loan.
Worked example
A $250,000 balance at 6% with 25 years remaining has a required payment of about $1,611/month. Adding extra each month:
| Extra / month | Paid off sooner | Interest saved |
|---|---|---|
| $100 | 3 years | ≈ $33,000 |
| $200 | 5 years 4 months | ≈ $58,000 |
| $500 | 10 years | ≈ $104,000 |
The $200 option costs $2,400 a year and removes over five years of payments, roughly $103,000 of scheduled outgoings, for a net interest saving near $58,000.
Before you start overpaying: three checks
First, confirm extra amounts are applied to principal, not held as a prepayment of next month's bill. Most lenders let you flag this. Second, check for early-repayment charges. They are rare on US mortgages but common on fixed-rate deals in the UK, Australia and New Zealand, which typically allow about 10% of the balance per year penalty-free. Third, compare the return. Overpaying a 6% mortgage is a guaranteed, tax-free 6% return. That usually beats savings accounts but may trail long-run investing, and it never beats clearing higher-interest debt first. The debt payoff calculator shows why.
Keep your emergency fund intact. Money paid into a mortgage is hard to get back out in a crisis.
Frequently asked questions
Is it better to pay extra monthly or make one lump sum per year?
Twelve monthly payments of $100 beat a single $1,200 payment at year-end by a small margin, because each early payment starts cutting interest sooner. The difference is minor. The habit you will keep matters more than the schedule.
What does one extra payment a year do?
One extra monthly payment per year (the effect of biweekly payment plans) typically shortens a 30-year mortgage by 4–6 years and saves a five-figure amount of interest at today's rates.
Should I overpay the mortgage or invest instead?
Overpaying earns a guaranteed return equal to your mortgage rate. Investing offers a higher expected but uncertain return. Many people split the difference after securing employer retirement matches and clearing high-interest debt. The right mix depends on your rate, risk tolerance and tax situation.
Does paying extra lower my monthly payment?
Not automatically. The required payment stays the same, and the loan ends sooner. Some lenders offer to "recast" the loan after a large lump sum, which keeps the term and lowers the payment instead. Decide which outcome you want before paying.
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This calculator is for general information and education only. It is not professional advice. Confirm important decisions with a qualified adviser.