Adding even a small amount to your mortgage payment each month goes straight to principal. Because mortgage interest is charged on the remaining balance, every extra dollar you pay today reduces the interest charged in every month that follows. This calculator compares your loan with and without an extra monthly payment so you can see exactly how much time and money you would save.
How this calculator works
First, the calculator works out your standard principal-and-interest payment using the loan amount, rate and term. That payment is fixed for the life of a fixed-rate mortgage.
Next, it runs two month-by-month amortization schedules. In each month, interest equals the current balance multiplied by the monthly rate (your annual rate divided by 12). The rest of the payment reduces the balance. In the second schedule, your extra payment is added to every month, so the balance falls faster and less interest accrues.
The difference between the two schedules is your savings: total interest saved and the number of months shaved off the loan. The year-by-year table shows how the balance falls under the extra-payment plan.
The formula
M = P × r / (1 − (1 + r)^−n)- M
- monthly principal-and-interest payment
- P
- loan amount (principal)
- r
- monthly interest rate = annual rate ÷ 12
- n
- number of monthly payments = years × 12
Worked example
Take a $350,000 loan at 6.5% for 30 years. The monthly rate is 0.065 ÷ 12 ≈ 0.005417 and there are 360 payments, which gives a standard payment of about $2,212. Over the full term you would pay roughly $446,000 in interest.
Now add $200 a month. In the first month, interest is $350,000 × 0.005417 ≈ $1,896, so a normal payment puts about $316 toward principal. With the extra $200, $516 goes to principal — over 60% more. That gap compounds every month.
The result: the loan is paid off in roughly 24 years instead of 30, and total interest falls by around $100,000. Your exact figures appear above as you change the inputs.
Tips
- Confirm with your servicer that extra money is applied to principal, not held for next month's payment.
- Check your loan for prepayment penalties. Most conventional US mortgages issued after 2014 do not have them, but some do.
- Compare against other goals: paying off a 6.5% mortgage is a guaranteed 6.5% return, but high-interest credit card debt or an employer 401(k) match usually comes first.
Frequently asked questions
Is it better to make extra mortgage payments or invest?
Paying extra earns a guaranteed return equal to your mortgage rate. Investing may earn more over time but carries risk. Many people pay off high-interest debt and capture any employer match first, then split extra cash based on their rate and comfort with risk.
Does an extra payment lower my monthly payment?
No. On a standard fixed-rate mortgage, extra payments shorten the loan rather than reduce the required monthly payment. Some lenders offer a recast, which re-amortizes the lower balance into a smaller payment for a fee.
How much faster will one extra payment per year pay off my mortgage?
On a typical 30-year loan, one extra full payment per year (or 1/12 extra each month) usually cuts about 4 to 6 years off the term, depending on the rate.
Do extra payments reduce escrow or PMI?
Extra payments do not change escrow for taxes and insurance. They can help you reach 20% equity sooner, which lets you request PMI removal on a conventional loan.